Accountancy watchdog investigates KPMG's Conviviality audit

The Financial Reporting Council said it had started an investigation into KPMG’s audit of Conviviality for the year to the end of April 2017.

The regulator also said it was investigating an unidentified individual accountant over the preparation and approval of Conviviality’s financial statements.

Conviviality went into administration in April 2018 less than a month after the company found an unpaid £30m tax bill. Its retail business, which includes Wine Rack and Bargain Booze, was sold to grocery retailer and wholesaler Bestway on 9 April.

The investigation is the latest move in a flurry of activity by the FRC, which MPs and governance groups have accused of being a toothless regulator of Britain’s big four accountants – KPMG, PwC, EY and Deloitte.

The FRC’s inquiry is also another piece of bad news for KPMG, which was the auditor of Carillion before the outsourcer went bust in January. The FRC is investigating KPMG’s work for Carillion and in June singled out the firm for an "unacceptable deterioration" in the quality of its audits for big companies.

The FRC has also slapped a record £6.5m fine on PwC over its auditing of BHS before the retailer’s collapse and is investigating Deloitte’s audit work for SIG, the building supplies company that overstated its profits. John Kingman, a former Treasury official, is carrying out a review of the FRC for the government.