KPMG faces an investigation over its audit of a FTSE 100 gambling giant.

The industry watchdog yesterday said it will probe the accounting giant’s work on Ladbrokes’ owner Entain’s 2022 accounts.

The investigation is a major blow for the Big Four auditor, which has been trying to improve its audit arm after a series of fines and lawsuits.

Scandals including the collapse of its client Carillion in 2018 have dented KPMG’s reputation and seen it rack up more than £30million worth in penalties since 2018.

The Financial Reporting Council (FRC) hit the accountant with a record £21m fine over the ‘textbook failure’ of its audits of Carillion’s accounts after the outsourcing giant went bust.

In 2021, KPMG was fined £13million over the sale of bedmaker Silentnight to private equity group HIG. 

Questions: Industry watchdog the Financial Reporting Council said it will probe KPMG’s work on Ladbrokes’ owner Entain’s 2022 accounts

Yesterday, the FRC said it had made the decision to launch the latest probe at a meeting in November. The investigation will be carried out by the watchdog’s enforcement division.

A spokesman for KPMG, which has audited Entain’s accounts since 2018, said: ‘We will cooperate fully with the FRC to conclude this matter as quickly as possible.’

Entain declined to comment on the probe. The investigation comes after the Coral owner battled its own controversies.

Chief executive Jette Nygaard-Andersen left at the end of 2023 after just two years. 

Investors had been frustrated with the share price under the Danish businesswoman’s leadership, with the firm losing 35 per cent of its market value during her tenure.

She left after a £615million settlement – called a deferred prosecution agreement (DPA) – paid by Entain to resolve an investigation into alleged bribery at its former Turkish online betting business. 

It was the second-biggest penalty handed out by UK courts since the launch of the DPA scheme began around a decade ago.

The DPA with the Crown Prosecution Service followed a four-year probe led by HM Revenue and Customs linked to ‘potential corporate offending’ at the betting firm.

The taxman investigated the activities of former employees and suppliers, and the alleged failure of the company to have adequate bribery prevention measures in place.

Entain sold the Turkish unit in 2017 before its £4billion takeover of Ladbrokes.