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The Financial Reporting Council (FRC) has launched an investigation into KPMG’s audit of Entain plc’s financial statements for the year ending 31 December 2022. The probe intensifies scrutiny on both the Big Four audit firm and Entain, a major gambling company that owns Ladbrokes, Coral, and other global gaming brands. This development comes amid a series of regulatory challenges faced by both entities, raising questions about compliance and governance practices in the corporate and auditing sectors.
The FRC, tasked with regulating auditors and promoting high-quality corporate reporting, announced its inquiry on 19 January 2025. The investigation will assess whether KPMG adhered to audit regulations and standards in its review of Entain’s financial statements. In response to a media query, a spokesperson for KPMG stated, “We will cooperate fully with the FRC to conclude this matter as quickly as possible.”
The announcement follows significant prior penalties imposed on KPMG for audit failures in unrelated cases, including a £21 million fine over its audit of Carillion’s financial statements in 2018. Such lapses have prompted regulatory bodies to closely monitor the firm’s audit practice.
Entain, one of the largest players in the global gambling industry, has been no stranger to controversy. The FRC’s investigation adds to its mounting legal and regulatory challenges, both in the UK and internationally:
Entain has declined to comment on a media query regarding the FRC probe.
The FRC’s probe is significant for both KPMG and Entain. For KPMG, the investigation’s findings could influence its reputation and ability to secure high-profile audit clients. As the firm faces increasing scrutiny, its leadership has stressed investments in improving audit practices to prevent future failures.
For Entain, the investigation compounds its already precarious position. Regulatory penalties and legal challenges have significantly impacted its market perception and financial stability. Following the announcement of the FRC’s probe, Entain’s stock price dropped 2.24 percent to an intraday low of 654.60 GBX on Monday.