BAE Systems is ready to publish an external audit of its ethical conduct within a year, as part of a series of measures to restore its reputation after allegations of corruption in relation to a big arms contract.

Britain's largest defence company is expected to announce the measure as early as this week in response to recommendations by Lord Woolf, former Lord Chief Justice, about how it could improve its ethical standards, the Financial Times reported.

BAE is already in talks with external auditors about taking on a role, according to defence industry executives. KPMG, which audits BAE accounts, would likely be ruled out on conflict of interest grounds, the FT reported.

The audit is expected to accompany publication of the company's corporate social responsibility and annual reports.

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BAE beats deadline on ethics audit