The body is looking into KPMG’s conduct to check whether the firm was ‘properly independent’ when it audited Pendragon’s books in 2010 and 2011 – and also whether the auditor breached ethics ‘in relation to the non-timely disposal of a shareholding in a client entity.’
According to the Telegraph, the investigation centres on its chairman: Mel Egglenton. Egglenton reportedly became a non-executive director at Pendragon in December 2010 – just nine months after he stepped down from KPMG.
In a statement printed in the Financial Times, KPMG said it was ‘very disappointed’ that one of its partners ‘mistakenly failed to dispose of the relevant shares on a timely basis and that our firm’s procedures, in this instance, did not deal appropriately with that failure.’
‘We fully accept that the holding of shares in a client by a partner is in clear contravention of UK Ethical Standards.
‘However, on becoming aware of the matter, we took action in relation to the partner concerned and initiated a review of procedures to ensure that lessons are learnt and applied.’