Britain's accountancy watchdog has opened an investigation into KPMG's audit of Rolls- Royce after the engine-maker agreed to pay £671 million to settle bribery and corruption claims.
The Financial Reporting Council (FRC) said it will probe the conduct of the accountancy giant in relation to the audit of the financial statements of Rolls-Royce for 2010, 2011 and 2013.
The decision to investigate follows a Deferred Prosecution Agreement between Rolls-Royce and the Serious Fraud Office in January, which saw the firm stump up £671 million to settle corruption and bribery allegations.
The FRC said: "The FRC has commenced an investigation under the Audit Enforcement Procedure into the conduct of KPMG Audit Plc, in relation to the audit of the financial statements of Rolls-Royce Group plc for the year ended 31 December 2010 and of Rolls-Royce Holdings plc for the years ended 31 December 2011 to 31 December 2013.
"The decision to investigate follows the SFO announcement on 17 January 2017 of a Deferred Prosecution Agreement between the SFO and Rolls-Royce which relates to offences including conspiracy to corrupt and a failure to prevent bribery."
The agreements relate to bribery and corruption scandals involving intermediaries in overseas markets such as Indonesia and China.
Rolls-Royce first passed information to the SFO in 2012 after facing "allegations of malpractice" in the two countries, after which the fraud squad launched a formal investigation.
Officials for the firm said at the time its own investigations had found "matters of concern" in additional overseas markets.