The Financial Reporting Council (FRC) has closed its investigation into KPMG's conduct as auditors to British Aerospace/ BAE Systems Group and subsidiaries, saying there is little chance of reaching a conclusion as the events under consideration took place so long ago.

In 2010 the Accountancy and Actuarial Discipline Board (AADB) started an investigation into audits and professional services advice provided by KPMG to BAE during the period 1997 to 2007. The disciplinary action centred on commission payments BAE had made to third parties, after the defence contractor was fined a total of £285m in 2010 in relation to bribery charges brought by the US and UK authorities.

The FRC says it subsequently emerged that proper assessment of KPMG's conduct would require the AADB to look at work undertaken by the firm in the years prior to 1997. The FRC has now decided that it is not in the public interest to extend the investigation in this way because there is no realistic prospect that a tribunal will make an adverse finding in respect of a complaint relating to work done so long ago.

The investigation has therefore been closed in accordance with paragraph 7(14) of the FRC Accountancy Scheme.

In a statement, KPMG said it had said in 2010 it did not believe there had been any act of misconduct at the auditor and that it would cooperate fully.

'We have done so and we welcome the announcement by the Financial Reporting Council that the case has been closed and that no further action is proposed,' a KPMG spokesman said.