The United Kingdom’s Financial Reporting Council (FRC) has launched two separate investigations into the conduct of KPMG Audit Plc.
The watchdog said it was investigating whether KPMG was independent when it audited car dealer Pendragon’s financial statements for 2010 and 2011 as well as looking into a ‘non-timely disposal of a shareholding’ in a client by a KPMG member.
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The probes mean the accounting firm could face three FRC inquiries as the regulator decides whether to investigate the audits of HBOS Plc.
The FRC is waiting on reports from the UK Parliament and financial regulator to consider whether it has a case, spokeswoman Sophie Broom said last month. KPMG was the auditor for HBOS before it was taken over by London-based Lloyds Banking Group Plc in a government-backed deal in 2008. KPMG said it would cooperate with the investigations.
In a statement, KPMG said: "We remain of the view that our independence as auditor for these years was maintained."
The investigation comes weeks after KPMG was forced to resign from two audit mandates in the United States after a partner confessed to passing on inside information to a golfing buddy. The partner and his acquaintance are facing criminal charges.
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