The Financial Reporting Council (FRC) (www.frc.org.uk) says that it is has begun an investigation into KPMG’s audit of the accounts of Derby-based aero-engine manufacturer Rolls-Royce.

This follows the company’s settlement of £671 million with the Serious Fraud Office (SFO) earlier this year concerning corruption allegations.

The FRC said: “We have 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.”

KPMG said: “It is important that regulators acting in the public interest should review high-profile issues. We will co-operate fully with the FRC investigation, which follows the SFO’s investigations into Rolls-Royce.

“We are confident in the quality of all the audit work we have completed for Rolls-Royce, including the period the FRC is considering.”

The firm has audited Rolls-Royce for 26 years, but is expected to be replaced in 2018 by Price Waterhouse Coopers.