The UK’s Financial Reporting Council (FRC) said today it will open an investigation into KPMG, one of the "big four" accounting firms, in relation to its auditing of collapsed construction and services giant Carillion plc.
Covering the years ended 31 December 2014, 2015 and 2016, and additional audit work carried out in 2017, the investigation will be conducted by the FRC’s Enforcement Division, and will consider whether KPMG breached any requirements, in particular the ethical and technical standards for auditors.
It is one of three investigations now underway into Carillion, which entered compulsory liquidation on 15 January with just £29m cash and more than £1.5bn of debt, inflicting major losses on creditors and pensioners and putting thousands of jobs at risk.
The FRC said it will examine KPMG’s "use and disclosure of the going concern basis of accounting, estimates and recognition of revenue on significant contracts, and accounting for pensions".
An investigative and disciplinary body for accountants and actuaries in the UK, the FRC said it will "conduct the investigation as quickly and thoroughly as possible".
The FRC also said it 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".
Meanwhile, the UK’s Financial Conduct Authority, whose remit does not cover auditing, is already investigating the financial statements Carillion issued before its shock profit warning last July, when it revealed £845m of writedowns.
In a third investigation, the government’s Insolvency Service is probing the conduct of Carillion’s directors, past and present.
The FRC sais 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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A bit horse and stable door, no enquiry will help the pensioners much both existing and up and coming. there is still a long way to go before the current pension system works as it should for the members of these pensions. The pension funds should take payment presedence over all other bodies and the first pension payment shortage should be the time to trigger enquiries by governing bodies, not after the collapse.
What a mess!!