Accountancy watchdog confirms second probe into Carillion collapse

There were concerns about a small number of documents which were immediately reported to the FRC, KPMG said

Carillion collapsed at the start of 2018

Audit watchdog the Financial Reporting Council has launched a second investigation into KPMG following the collapse of construction firm Carillion.

This latest probe is into information supplied to it by KPMG for an audit quality review into how the firm gave Carillion a clean bill of health in 2016.

READ: Carillion collapse set to cost taxpayers £150mln, new document reveals

KPMG started its own internal investigation into the work for Carillion following the audit quality review and that investigation found some of the data supplied to the FRC might have been manipulated.

There were concerns about a small number of documents which were immediately reported to the FRC, KPMG said, though nothing was found that would change its opinion over Carillion’s 2016 accounts.

“On discovery of this information, we immediately reported our findings to the FRC”.

On Monday it was revealed that Peter Meehan, the partner at KPMG who carried out the Carillion audit, had been suspended by KPMG along with three other staff.

The FRC was already investigating KPMG’s audits of Carillion over the period 2014-2017 and the conduct of two former finance directors, Richard Adam and Zafar Khan.

“A key area of focus has been the financial performance of Carillion’s major contracts in both the construction and services divisions, and whether Carillion management and its auditors ensured that this was appropriately reported in its financial statements."

The FRC confirmed today that a second investigation started in November related to the provision of materials to the FRC by KPMG into aspects of the audit of Carillion for the year-end 2016.

The decision to open this investigation followed matters self-reported by KPMG, said the watchdog.



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