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Saturday 9 December 2023 Dublin: 10°C
PA Wire/PA Images File.

UK watchdog to investigate KPMG audits of collapsed building firm

Carillion went bust earlier this month.

ONE OF THE UK’s largest accounting firms, KPMG, is being investigated over the collapse of the Carillion construction group.

The Financial Reporting Council has launched the probe after making enquiries about Carillion’s July 2017 profit warning, it said in a statement.

Carillion went bust earlier this month, announcing its liquidation after the heavily-indebted company failed to secure a last-minute financial rescue from the government and banks.

The collapse has led to concerns over hundreds of projects on the books of the company, including a number of Irish school projects.

Carillion is involved in a number of projects in Ireland, including five schools and the Carlow Institute of Further Education. Now, the FRC will investigate the audits carried out by KPMG between 2014 and 2017.

An FRC statement said:

“The investigation will be conducted by the FRC’s Enforcement Division, and will consider whether the auditor has breached any relevant requirements, in particular the ethical and technical standards for auditors. Several areas of KPMG’s work will be examined 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.

“The FRC will conduct the investigation as quickly and thoroughly as possible.

“The FRC is progressing with urgent enquiries into the conduct of professional accountants within Carillion in connection with the preparation of the financial statements and other financial reporting obligations under the Accountancy Scheme.”

Carillion had public sector and private partnership contracts worth £1.7 billion in the UK prior to its collapse.

The UK government has meanwhile said that the company’s 19,500 staff in public sector jobs will continue to be paid, at a potential cost to the taxpayer of hundreds of millions of pounds.

Carillion has been involved in a number of large-scale projects, such as Battersea Power station redevelopment and the Anfield Stadium expansion. It was also due to be involved in the forthcoming HS2 high-speed railway line in the UK.

In Ireland, Education Minister Richard Bruton has said that Carillion’s projects in Ireland will be fulfilled, but may be delayed by a number of weeks.

Read: Minister ‘confident’ school building projects not in jeopardy after construction firm collapse

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