'Big Four' accountancy firm KPMG is being investigated over commissions paid during ten years of BAE Systems audits.
The investigation by the Accountancy and Actuarial Discipline Board (AADB) focuses on the audits of British Aerospace/BAE Systems between 1997 and 2007, looking at commissions paid by BAE to subsidiaries, agents or other companies.
Any professional advice, consultancy or tax work provided to BAE by KPMG during that period will also come under the microscope in relation to commission payments.
Heads of the "Big Four" accountancy firms, including KPMG, are already being forced defend themselves to a House of Lords committee investigating their role in the recent financial crisis.
The AADB investigation inot KPMG will focus on commissions connected to three legal entities: Red Diamond Trading; Poseidon Trading Investments; and Novelmight.
In February BAE paid fines totalling £285m to US and UK authorities for false accounting and a failure to keep reasonably accurate accounting records, to settle corruption allegations against the business.
A KPMG statement said: "KPMG Audit plc notes the release made today by the AADB concerning its investigation into certain work carried out by the firm in relation to British Aerospace/BAE Systems Group plc.
"The firm does not believe there has been any act of misconduct. It will of course be cooperating fully with the AADB to ensure that the matter is brought to a swift conclusion."
First reported by IFAonline's sister title Accountancy Age.
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