The UK audit watchdog has opened a formal investigation into Big Four firm KPMG and two accountants over accounts belonging to engineering group John Wood Group.
The Financial Reporting Council revealed on Thursday that it has officially launched two separate regulatory investigations concerning the financial reporting and statutory auditing of the former London-listed firm.
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.
The delisting followed its acquisition by Dubai-based Sidara, marking the end of the company’s time as a publicly traded business on the London exchange.
The business was fined nearly £13m by the Financial Conduct Authority in March for publishing misleading financial results and failing to maintain proper market controls.
The City regulator found 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.
The FRC’s conduct committee green-lit the investigation last month, placing both John Wood Group and its auditor KPMG firmly under regulatory scrutiny.
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.
The watchdog has been particularly active in recent weeks, opening 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.
The flurry of investigations signals a sharpening of regulatory focus on audit quality and financial transparency across UK-listed and formerly listed businesses.
For KPMG, the probe adds to mounting pressure on the Big Four accounting firms to demonstrate greater rigour in their audit practices amid growing public and regulatory scrutiny.