FRC Clears KPMG of Wrongdoing in Entain 2022 Audit Investigation

The Financial Reporting Council closed its investigation into KPMG's audit of Entain's 2022 financial statements on April 2 without bringing any enforcement action, handing the Big Four firm an unambiguous win at a moment when its UK audit practice is under pressure on multiple fronts.

"Having reviewed the evidence obtained in the investigation, and having considered all relevant factors, the FRC's executive counsel has decided not to bring enforcement action," the regulator said. KPMG responded: "We are pleased the investigation has concluded without sanction, and we remain committed to delivering sustainable audit quality."

The FRC opened its investigation into KPMG's audit of Entain's 2022 accounts in November 2024 and announced the probe publicly two months later. When the investigation was disclosed in January 2025, a KPMG UK spokesperson said: "We will cooperate fully with the FRC to conclude this matter as quickly as possible." The probe ran under the FRC's Audit Enforcement Procedure, a formal process that can result in sanctions, fines, or referral to tribunal if the executive counsel's findings are disputed.

The investigation arose more than a year after Entain was ordered to pay a £615mn fine as part of a deferred prosecution agreement following allegations of bribery at the company's former Turkish unit. The settlement, reached with the Crown Prosecution Service, included a £585m financial penalty, a £20m charitable donation, and a £10m contribution. The CPS went further, charging 11 individuals, including five former Entain executives, with bribery and conspiracy to defraud in connection with the Turkish business. The question the FRC set out to answer was whether KPMG's audit work on the 2022 accounts, which would have covered the period shadowed by that scandal, met professional standards. The answer, as of Thursday, is that it did.

KPMG served as Entain's group external auditor and had completed its sixth consecutive audit for the company by 2023. That continuity made the FRC's scrutiny particularly pointed: a long-tenured auditor sitting across accounts tied to a company that later admitted criminal conduct through a subsidiary is precisely the kind of situation regulators have been looking at more aggressively since the post-Carillion overhaul of audit standards. KPMG was fined a record £21m in 2023 for failures in its audit of Carillion, the construction giant that collapsed in 2018.

The clearance lands in the same week KPMG's audit division is absorbing difficult news on another front. Last week, KPMG told staff it planned to cut 600 UK jobs, including about 440 assistant manager roles, in its audit unit. For the auditors and assistant managers currently navigating that restructuring, the FRC decision at least removes one significant cloud. An adverse finding on the Entain work would have compounded an already bruising period for the practice and raised fresh questions about quality controls at the very level of seniority now facing redundancy.

The FRC's decision not to act does not mean the underlying questions about auditing during periods of corporate misconduct have been resolved across the industry. Regulators have shown they will open investigations in these circumstances; Thursday's outcome shows they will also close them when the evidence does not support action.