KPMG is being investigated in two instances by the accounting watchdog in relation to its conduct as an auditor, with questions raised over its independence; and separately for the untimely way in which a partner of the firm disposed of shares held in a client.
Both the firm and a partner are being investigated by the Financial Reporting Council (FRC) in relation to the non-timely disposal of a share-holding in a client entity - if this is found to be the case, it could amount to a breach of ethical standards for auditors.
The partner being investigated is understood to still be with the firm.
In the second matter, the FRC is investigating the firm in connection with its audit of Pendragon Plc - the FRC will be specifically considering whether the firm was independent during the time that it conducted the audits of Pendragon's financial statements for the 31 December 2010 and 2011 year ends.
Both decisions to investigate the firm followed consultation with the ICAEW.
Commenting on the investigations, KPMG issued a statement saying the firm takes its professional responsibilities very seriously, has stringent policies and procedures in place to ensure that its independence is not compromised and regularly reviews those procedures to ensure that they remain appropriate.
'We are therefore very disappointed, in relation to the first matter, that one of our partners mistakenly failed to dispose of the relevant shares on a timely basis and that our firm's procedures, in this instance, did not deal appropriately with that failure. We fully accept that the holding of shares in a client by a partner is in clear contravention of UK Ethical Standards. However, on becoming aware of the matter, we took action in relation to the partner concerned and initiated a review of procedures to ensure that lessons are learnt and applied.
'In relation to the 2010 and 2011 Pendragon audits, we remain of the view that our independence as auditor for these years was maintained.
'We are committed to the highest standards of professionalism, quality and integrity and will of course co-operate fully with both investigations,' the firm said.
The local investigations into KPMG also come amidst US investigations by the Securities and Exchange Committee (SEC) following revelations of insider trading as a result of a senior KPMG audit member of the firm passing tips to a golfing partner.
The golf partner, Californian jeweller Bryan Shaw, gave Scott London - KPMG's head of audit for the Pacific southwest - at least $60,000 (£38,500) cash, a $12,000 (£7,700) Rolex watch and concert tickets in exchange for tips.
When the news broke in early May, the US firm KPMG resigned from two audits - Herbalife, the nutritional supplement seller, and shoe manufacturer Skechers - saying in a statement that 'the firm's independence had been impacted'.
