City watchdog widens Carillion probe

The financial performance of Carillion’s major contracts is being probed as part of a City watchdog investigation into the collapsed contractor.

Last January, the Financial Reporting Council (FRC) announced it was investigating KPMG’s audits of Carillion between 2014 and 2017, while it confirmed it was looking into the conduct of two former finance directors, Richard Adam (pictured) and Zafar Khan, in March 2018.

But the FRC has now confirmed it is looking into the performance of the failed firm’s major construction and services contracts.

In an update, the City watchdog said it was investigating whether Carillion management and its auditors ensured that the performance of key contracts was appropriately reported in its financial statements

The FRC also confirmed that it has opened a further investigation relating to materials given to it by KPMG in connection with the FRC’s audit quality review for the audit of Carillion’s results for the year end 2016.

The decision to open this investigation followed matters self-reported by KPMG.

This additional investigation is what led to the suspension of KPMG partner Peter Meehan, who was the lead auditor on Carillion’s accounts, and three members of his team, which KPMG confirmed earlier this week.

While interviews have already been conducted with audit team members and Carillion senior executives, the FRC said further interviews were planned for early this year.

It added that it expected the investigation to continue well into 2019.