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Sun August 09 2020

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Carillion audit investigation needs more time

13 Jan The investigation into KPMG’s auditing of Carillion has been delayed by at least six months due to the complexity of the case.

The Financial Reporting Council announced the opening of an investigation in relation to KPMG’s audit of the financial statements of Carillion in January 2018, after the construction giant filed for insolvency.

The first stage of its investigation was meant to be completed by January 2020. It has now been put back to summer 2020.

The FRC is investigating KPMG’s auditing of Carillion for 2013 to 2017. It is also looking into the conduct of former Carillion finance directors Richard Adam and Zafar Khan.

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Latest update from the FRC said: “Our investigation of the audits is well advanced.  An extensive review has been undertaken of a substantial volume of material, including the audit work papers, documents produced by Carillion and third parties e.g. internal auditors and external advisors, and emails and other correspondence. We have also conducted a series of detailed interviews. An independent expert is now considering our analysis in order to provide an expert opinion on whether there were breaches of auditing standards. We are also taking advice from external Counsel and we continue to cooperate to the fullest extent permissible with other regulators pursuing parallel investigations.

“The scale and complexity of this case is exceptional, with a huge volume of documents and information that has had to be reviewed and analysed.  The investigation encompasses a four-year period, and numerous significant audit areas, including the accounting for construction and services contracts, pensions liabilities, goodwill and going concern. All of the accounting years and each of the audit areas identified remain under active consideration The FRC therefore currently expects to complete the first stage of its investigation by summer 2020, rather than by January 2020.”

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