The FRC said that a key area of focus for its investigation into any potential wrong-doing had been “the financial performance of Carillion’s major contracts in both the construction and services divisions, and whether Carillion management and its auditors ensured that this was appropriately reported in its financial statements”.
The investigations are also considering conduct relating to pension liabilities, goodwill, cash disclosures and going concern, the FRC said.
The FRC is also investigating KPMG’s audits of Carillion between 2014 and 2017, and the conduct of two former finance directors, Richard Adam and Zafar Khan.
Additionally, in November 2018, the FRC opened a further investigation relating to the provision of materials to the FRC by KPMG in connection with the FRC’s audit quality review into aspects of the audit of Carillion for the year end 2016.
The FRC said that it was analysing “very significant quantities of documents relating to these areas”. Detailed interviews have been conducted with audit team members and Carillion senior executives and further interviews are planned for early 2019.
It said: “The matters being investigated by the FRC are complex and are expected to continue well into 2019. They are a critical stage in the process, the findings of which form the bedrock on which any regulatory proceedings are based. The FRC is committed to completing its investigations promptly and thoroughly.”
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