Accounting firm KPMG is facing intense scrutiny from investigators and investors for its role in the crisis at newspaper group Hollinger.

An internal investigation at Hollinger International, the publicly traded group in which Lord Black holds a controlling stake, is examining KPMG's role in approving Security & Exchange Commission (SEC) filings which have turned out to be wrong.

The scrutiny of KPMG shows that the Hollinger crisis could extend beyond Lord Black, who stepped down as chief executive on Monday after it emerged that he and other senior executives had received non-compete payments worth $32.15 million (€26.9 million) which had not been approved by the audit committee of Hollinger's board or properly disclosed to investors.

Yesterday, Lord Black told reporters "All you fellas that wrote today that I'm finished may not have it right," pointing out that he remained chairman. He said that "investors should not assume the Hollinger empire will be entirely broken up and sold".

KPMG said it remained confident that it acted appropriately at all times at Hollinger and said it stood behind its work.

People close to talks between the firm and Hollinger point out that KPMG has taken a more critical stance of the company in the past few months, as the level of financial disclosures has increased.

KPMG, like other large accounting firms, is struggling to restore its image after the wave of corporate scandal in the US.

Yesterday, Congressional hearings turned the spotlight on the tax advice and tax shelter work that KPMG and others offered their clients. The SEC has also accused KPMG, in a civil suit, of fraud in connection with its work at copier company Xerox.  - (Financial Times Service)