Britain’s Financial Reporting Council (FRC) has opened an investigation into KPMG’s auditing of the now-collapsed Carillion covering the years 2014 to 2017, the watchdog said on Monday.
Construction and outsourcing firm Carillion collapsed this month after banks pulled the plug, raising concerns about hospitals, road and other infrastructure projects and the fate of hundreds of suppliers.
The FRC said it would look at issues such as how the auditors recognised revenue on significant contracts and accounted for pensions.
The trustee of Carillion’s pension scheme said on Monday it may have a deficit of about £990 million (€1.12 billion).
“The FRC is progressing with urgent enquiries into the conduct of professional accountants within Carillion,” the FRC said in a statement.
The Department for Business, Energy and Industrial Strategy had asked the FRC to examine the preparation of Carillion’s accounts past and present, as well as the company’s auditors.
The fall of Carillion has forced the government to guarantee public services ranging from school meals to road works provided by the company.
The investigation will be conducted as quickly and thoroughly as possible, the FRC said. It said it would be done in coordination with the Financial Conduct Authority, Insolvency Service and the Pensions Regulator, all of which are investigating Britain’s biggest corporate failure in a decade.
A KPMG spokesman said the firm believed it conducted Carillion?s audit appropriately and responsibly, and would cooperate fully with the FRC’s investigation.
“Transparency and accountability are vital in building public trust in audit,” the spokesman said. “We believe it is important that regulators acting in the public interest review the audit work related to high profile cases such as Carillion.”
Carillion’s collapse followed three profit warnings in 2017.
- Reuters
