Watchdog probes KPMG over Wood Group audit
The audit watchdog has opened an investigation into Big Four giant KPMG and two accountants over the accounts belonging to engineering and consulting firm John Wood Group.
The Financial Reporting Council (FRC) revealed on Thursday that it officially launched two separate regulatory investigations concerning the financial reporting and statutory auditing of the former London-listed group.
John Wood Group, an engineering and consulting business headquartered in Scotland, was delisted from the London Stock Exchange in March after less than a year on the public market, following its acquisition by Dubai-based Sidara.
The business was fined nearly £13m by the Financial Conduct Authority (FCA) in March for publishing misleading financial results and failing to maintain proper market controls. The City regulator said that following the poor performance of certain projects, the Group’s accounting judgements were inappropriately influenced by its desire to maintain previously stated financial results.
News of Wood Group’s inaccuracies in financial reporting broke in November 2024, with the firm’s stock sinking over 70 per cent since then to around 28p.
KPMG also in the hot seat
Now it, along with its audit firm, KPMG, faces a probe by the FRC after the conduct committee green-lit the investigation last month.
The probe will focus on how prepared financial information was and how it communicated with auditors regarding John Wood Group’s ‘Projects Business Unit’ across 2022, 2023, and 2024.
The FRC is also investigating KPMG regarding its statutory audit of the group’s consolidated financial statements for the 2023 financial year.
A KPMG UK spokesperson said: “We will fully cooperate with the FRC to conclude this matter as quickly as possible.”
In the last month, the FRC has opened probes into scrutinising claims of financial misreporting at Battersea Power Station after the former chief executive, and into the accounts of collapsed mortgage lender Market Financial Solutions.