Carillion’s lead auditor suspended after investigation finds ‘concerns’
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A Birmingham-based partner for KPMG who was lead auditor for Carillion, the construction giant which collapsed last year, has been suspended.
Peter Meehan and the three other employees have been suspended as part of an investigation into an audit quality review by the Financial Reporting Council in 2017.
A spokesman for KPMG said: “Concerns were identified in connection with a small number of documents provided to the FRC’s team during the routine audit quality review. On discovery of this information, we immediately reported our findings to the FRC.
“We are taking this matter extremely seriously and have engaged outside legal counsel to conduct an independent investigation into the circumstances of the audit quality review and the conduct of the individuals involved. We acted swiftly and decisively on these findings and will continue to take all necessary steps to deal with this, including cooperating fully with the FRC.”
Their conduct is being investigated amid concerns that documents provided to the audit watchdog were backdated, The Times reported.
Last year, KPMG defended its actions in signing off Carillion’s accounts just months before the construction group revealed a devastating profit warning which ultimately led to its demise.
Meehan faced a grilling from MPs when he appeared before the joint Work and Pensions and Treasury Select Committee.
In a two-hour evidence session, he was repeatedly questioned by MPs on why he had signed off the annual report just months before Carillion revealed an £845m block hole in its accounts.
He said the December 2016 accounts had shown up a number of challenges including low margins on contracts, debt issues and pension liabilities.
He said that in his role as auditor he had challenged the company on these but he denied that he had been misled by the Carillion management.
KPMG said it has concerns that documents handed to the watchdog as part of that review might have been altered between the audit being signed off and the date they were given to the regulator.
It is understood that the FRC gave the audit a satisfactory rating about a year before Carillion’s collapse, The Times reported.
A spokesman for the FRC said: “In January 2018 we announced an investigation into the audit of the financial statements of Carillion. This is a substantial investigation, which is ongoing. We confirm we have been approached by KPMG, who have provided us with further materials in connection with the FRC’s review of aspects of the 2016 audit of Carillion.”