Senior KPMG Executive scrutinised amid M&C Saatchi investigation

One of KPMG’s most senior executives faces scrutiny from the UK audit regulator over a series of errors in the accounts of M&C Saatchi. The Financial Reporting Council has made initial inquiries to determine whether KPMG’s auditing, which was led by Chief Risk Officer John Bennet, met required standards over a four-year period.

Formed in 1995, M&C Saatchi Group is an international communications network headquartered in London. With more than 2,400 staff, the network spans 23 countries with major hubs in the UK, Europe, US, Middle East & Africa, Asia and Australia. The firm is currently under investigation from the UK’s accounting watchdog relating to how its accounting regularities were disclosed to the market.

M&C Saatchi has admitted to £25.8 million of accounting errors and misjudgements, with £14 million of direct misstatements of profit before tax. As a result, the Financial Reporting Council (FRC) has been probing the company’s accounts, and its relationship with then-auditor KPMG.

Headed up by Chief Risk Officer John Bennett from 2013 to 2017, KPMG’s auditing is currently being assessed to see if it met regulatory requirements, according to four people familiar with the situation. As reported by The Financial Times, the 2018 audit was then led by another Partner, Adrian Wilcox, before KPMG resigned its role, and M&C Saatchi handed its auditing contract to PwC.

The new auditor wasted little time in establishing the client’s its true financial position, with the accounting scandal first coming to light in the summer of 2019. The accounting scandal at M&C Saatchi also prompted City regulator the Financial Conduct Authority to open an investigation into the firm in early 2020, leading to M&C Saatchi shares imploding, and being suspended for 10 weeks.

The FRC questions over M&C Saatchi add to the mounting problems facing KPMG’s audit team. The firm is already the subject of three FRC investigations over its audits of Carillion, which collapsed into liquidation in 2018; Conviviality, which went into administration in the same year; and Rolls-Royce, which is continuing to implement spending cuts to recover.

KPMG, John Bennett, Adrian Wilcox, the FRC and M&C Saatchi have not issued a comment.