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The accounts of construction products supplier SIG are under investigation by the Financial Reporting Council.

The City watchdog said it had launched a probe into the audit of SIG鈥檚 accounts over a two year period.

In a statement it said: 鈥淭he Financial Reporting Council (FRC) has commenced an investigation into the audit by Deloitte LLP of the financial statements of SIG plc for the years ended 31 December 2015 and 2016. 

鈥淭he investigation will be conducted under the Audit Enforcement Procedure (AEP) and will focus on the audit of cash and supplier rebates.

鈥淭he FRC has delegated the investigation to the Institute of Chartered Accountants in England and Wales, which is Deloitte鈥檚 Recognised Supervisory Body, in accordance with the AEP.鈥�

In February, SIG admitted profit booked in the last 18 months could have been inflated by more than 拢6m following a probe into accounting regularities which has saw the firm suspend a number of employees.

The FTSE 250 firm, which provides insulation and roofing to sites up and down the country, said it had asked its external auditor Deloitte and brought in KPMG to look into the allegations following claims made by a whistleblower at SIG Distribution 鈥� its insulation and interiors business.

SIG said the investigation had found that up to 拢3.7m of profit in 2016 had been overstated with a further 拢400,000 overstatement relating to the years before 2016.

And it added that profit for the six months to June 2017 had been overstated by up to 拢2.5m.

In an update accompanying its latest results in March - which saw turnover in the year to 31 December 2017 flat at 拢2.9bn with pre-tax losses more than halving from 拢110m to 拢51m and underlying pre-tax profit up 4% to 拢79m - SIG said KPMG had completed its review at SIG Distribution 鈥渨hich has identified no further material accounting cause for concern鈥�.

Heads still rolled however, with a number of employees 鈥渓eaving the business following disciplinary investigations into the circumstances鈥�. SIG added: 鈥淭he historical overstatements have been thoroughly investigated and reported and we have moved swiftly and decisively to address these serious matters.鈥�