KPMG, one of the big four accounting firms, is being sued by the UK government for its part in the collapse of Carillion.
Liquidators for the collapsed construction contractor believe KPMG failed to spot multiple ‘red flags’ in Carillion’s accounts that would have made it even more obvious that the company was heading for insolvency.
Carillion went bust in January 2018 with £7bn in debts. The High Court claim is seeking £1.3bn in redress from KPMG.
The auditing firm, which reportedly received £29mln for its audit work for Carillion over a period of 19 years, has not admitted any failings related directly to the audit and said it would “robustly defend the case”.
Earlier this month, however, the company did apologise for misconduct and misleading the UK’s accounting regulator, the Financial Reporting Council, after former auditors were accused of “forgery” related to audits, some of which were for Carillion.
“Responsibility for the failure of Carillion lies solely with the company’s board and management, who set the strategy and ran the business,” KPMG UK said.
Last month, KPMG was fined £3mln for shoddy work on the audit of Bargain Booze owner Conviviality, while last year – a year in which the firm’s UK partners trousered an average of £688,000 (up from £572,000 in 2020) – it was fined £13mln for misconduct in the sale of the bedmaker Silentnight to a private equity firm.