The BBC is reporting that the Serious Fraud Office (SFO) has started a formal investigation into Rolls-Royce over concerns about bribery and corruption in its overseas markets.
Meanwhile, according to The Sunday Times, the Financial Reporting Council has demanded that the aircraft engine maker spread upfront payments from development partners over the life of a project, rather than book them at once.
If the allegations are proven, then there are some interesting questions for the auditors (both internal and external).
- What did they know about the problems at Rolls Royce, if anything?
- And what should they have known?
Is the Expectations Gap about to be put to the test?