An investigation has been launched into KPMG’s audit of Rolls-Royce (LON:RR), following their settlement of the bribery case with the Serious Fraud Office earlier this year.
In January, the engineering group had to pay £671 million in penalties to settle the long-running allegations. Amid the fraud allegations and the slide in the pound, Rolls-Royce faced a £4.6 billion annual loss – the biggest in history.
“It is important that regulators acting in the public interest should review high profile issues. We will cooperate fully with the FRC’s investigation, which follows the SFO’s investigations into Rolls-Royce. We are confident in the quality of all the audit work we have completed for Rolls-Royce, including the 2010-13 period the FRC is considering.” said KPMG.
Rolls-Royse has since apologised to the high court following the millions of pounds worth of bribes paid, however, the timing of the FRC’s announcement comes at a bad time for the engineering group. They are holding the annual meeting in Derby today, where investors are expected to ask the board tough questions.
Details of the corruption were laid out at the court hearing, with several of bribes going back a quarter of a century in seven different countries.
“At this early stage in the year we see no reason to change our expectations for profit and importantly cash flow for the year as a whole.” said chief executive Warren East said in a statement to the stock exchange.
“We have some important transformation initiatives underway and, while we have made good progress in our cost-cutting and efficiency programmes, more needs to be done to ensure we drive sustainable margin improvements within the business.”
The cost-cutting programme hopes to save the company £200 million a year by the end of 2017.
KPMG said it would cooperate fully with the FRC’s investigation.