Reports says accountant Grant Thorton has stopped bidding for audit work
One of the MPs leading the inquiry into Carillion’s collapse has called for increased competition within the audit sector.
Frank Field (pictured), the chair of the work and pensions committee, has implored government to intervene following reports accountancy firm Grant Thornton will stop bidding for audit contracts from Britain’s largest listed companies.
Field, who co-chairs the inquiry, said: “That the next biggest contender in the audit market has decided to bow out of the ring surely adds to a central question emerging from our inquiry into the collapse of Carillion.
“If number five has given up trying to compete with the Big Four, what hope for the rest? It looks ever more like Government will have to act to restore competition in a market that is failing.”
Carillion’s external auditors KPMG have faced heat following the construction giant’s failure, with a number of Carillion’s large investors have laid into the performance of KPMG at an evidence session in early March.
Murdo Murchison, chairman of Kiltearn Partners, told the inquiry that he was now wary of all accounts audited by the Big Four accountant.
He said: “We have looked at our portfolio and we have two other UK-listed companies that have KPMG as there auditor.
“I now have two draft letters on my desk to write to the chairman of the audit committee at both companies asking for confidence from them that they are comfortable with the quality of service they are receiving.”
Murchison said that given the scale of money lost by investors, “the folks closest to the scene of the crime” had a case to answer.
Murchison also said the fact that KPMG had been doing the Carillion’s audits since 1999 highlighted a need to address the length of time an auditor could stay with a company.
Just two weeks after Carillion collapsed, the Financial Reporting Council announced it would be investigating Carillion’s external auditor KPMG under the Audit Enforcement Procedure in regards to its audits of accounts in the lead up to the construction conglomerate going bust.