KPMG Under Investigation Over Audits Of BAE Systems

Tue, 26 Oct 2010

KPMG, one of the world’s largest accountancy firms, is being investigated over its auditing work for arms manufacturer BAE Systems.

Industry regulator the Accountancy and Actuarial Discipline Board (AADB) said it will examine audits carried out between 1997 and 2007 in relation to commissions paid by BAE to third party agents and outside companies in major arms deals.

The AADB, which is part of the Financial Reporting Council (FRC), will also look into any professional advice or tax work provided by KPMG to BAE during the 10-year period on the operation of three offshore shell companies; Red Diamond Trading, Poseidon Trading Investments and Novelmight.

In a statement, KPMG said: "KPMG Audit plc notes the release made today by the AADB concerning its investigation into certain work carried out by the firm in relation to British Aerospace/BAE Systems Group plc."

"The firm does not believe there has been any act of misconduct. It will of course be co-operating fully with the AADB to ensure that the matter is brought to a swift conclusion."

A spokeswoman for BAE added: "The AADB has not indicated to BAE Systems that it has any basis for reaching a view that there is any material inaccuracy in any of the company's accounts ."

The AADB said penalties for any wrongdoing could include an unlimited fine for KPMG, or the withdrawal of the practicing certificates of the staff involved.
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