Carillion: Investigation launched into audit of firm’s finances
The financial watchdog, the Financial Reporting Council (FRC), has launched an investigation into accountancy firm KPMG’s audit of Carillion, following the collapse of the construction giant.
The FRC will investigate under the the Audit Enforcement Procedure in relation to KPMG’s audit of the financial statements of Carillion, following the profit warning issued in July 2017.
The investigation will cover the years ended 31 December 2014, 2015 and 2016, and additional audit work carried out during 2017.
The investigation will be conducted by the FRC’s Enforcement Division, and will consider whether the auditor has breached any relevant requirements, in particular the ethical and technical standards for auditors.
It follows the collapse of the firm, which saw debts in excess of £1.3bn, a pension deficit of almost £1bn, and hundreds of sub-contractors unpaid – meaning many jobs, including health and safety professionals, were put at risk.
Areas to be assessed
Several areas of KPMG’s work will be examined including the audit of the company’s use and disclosure of the going concern basis of accounting, estimates and recognition of revenue on significant contracts, and accounting for pensions.
The FRC said it would ‘conduct the investigation as quickly and thoroughly as possible’.
A statement said: “The FRC is progressing with urgent enquiries into the conduct of professional accountants within Carillion in connection with the preparation of the financial statements and other financial reporting obligations under the Accountancy Scheme.
“It is liaising closely with the official receiver, the Financial Conduct Authority, the Insolvency Service and The Pensions Regulator to ensure that there is a joined-up approach to the investigation of all matters arising from the collapse of Carillion.”
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