The Financial Reporting Council (FRC) has launched two separate regulatory investigations into Big Four accounting firm KPMG and two individual accountants over their work on the financial reporting and statutory auditing of engineering and consulting firm John Wood Group.

The FRC confirmed on Thursday that its conduct committee approved the investigations last month.

John Wood Group, a Scotland-headquartered engineering and consulting business, was delisted from the London Stock Exchange in March after less than a year on the public market, following its acquisition by Dubai-based Sidara. The company had only relisted in 2024 after previously being taken private.

In March, the Financial Conduct Authority (FCA) fined the company nearly £13 million for publishing misleading financial results and failing to maintain proper market controls. The City regulator stated 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 financial reporting inaccuracies first emerged in November 2024. The firm's share price subsequently declined by more than 70 per cent, falling to approximately 28p.

The investigation into KPMG adds to a track record of FRC enforcement actions against the firm. In recent years, the watchdog has sanctioned KPMG over its audits of Carillion, Patisserie Valerie, and other UK companies, reflecting sustained regulatory scrutiny of audit quality at the largest firms.

Scope of the FRC Investigation

One investigation will examine how prepared financial information was generated and how it was communicated to auditors regarding John Wood Group's 'Projects Business Unit' across 2022, 2023, and 2024.

A second investigation focuses on KPMG's statutory audit of the group's consolidated financial statements for the 2023 financial year. The FRC has the power to impose financial penalties, reprimands, and conditions on firms and individual auditors where shortcomings are found.

A KPMG UK spokesperson said: "We will fully cooperate with the FRC to conclude this matter as quickly as possible."

The FRC has been active in recent weeks. Over the past month, the watchdog has also opened probes into claims of financial misreporting at Battersea Power Station following actions by its former chief executive, and into the accounts of collapsed mortgage lender Market Financial Solutions.