City watchdog begins probe into accountant
The Financial Reporting Council (FRC) has launched an investigation into Carillion auditor KPMG following the contractor’s collapse.
The investigation comes off the the back of enquiries made since Carillion issued its first profit warning last July and will look into KPMG’s audit of the failed firm’s financial statements.
It will cover the years ended 31 December 2014, 2015 and 2016 and additional audit work carried out during 2017.
The FRC’s Enforcement Division is set to investigate whether KPMG breached any requirements, particularly the ethical and technical standards for auditors.
Several areas of KPMG’s work are set to be put under the microscope 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.
And the financial watchdogsaid it was also looking at the role of ”professional accountants within Carillion in connection with the preparation of the financial statements and other financial reporting obligations”.
In a statement, the FRC promised: “The FRC will conduct the investigation as quickly and thoroughly as possible.”
A KPMG spokesperson said: ”As we have already commented, we believe that we conducted our role as Carillion’s auditor appropriately and responsibly.
“Transparency and accountability are vital in building public trust in audit. We believe it is important that regulators acting in the public interest review the audit work related to high profile cases such as Carillion. We will co-operate fully with the FRC’s investigation.”
The FRC, Official Receiver, the Financial Conduct Authority, the Insolvency Service and The Pensions Regulator are all carrying out their own investigations into Carillion.