Results of investigation into Carillion audit delayed
The outcome of an investigation into KPMG’s audit of collapsed construction giant Carillion won’t be available until the summer, it has been announced.
The Financial Reporting Council (FRC) said two years ago it had opened an investigation into KPMG’s auditing of Carillion for the years ended 31 December 2014, 2015 and 2016, and additional audit work carried out during 2017.
The FRC said in a recent update that the investigation was “well advanced”, having reviewed a substantial volume of material, including papers from internal and external auditors.
It said: “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 FRC says 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.”
The FRC is also investigating the conduct of Richard Adam and Zafar Khan, former group finance directors of Carillion and members of the ICAEW, in connection with the preparation of Carillion’s financial statements during the same period, as well as an additional, investigation into KPMG in connection with the FRC’s Audit Quality Review into aspects of the audit of Carillion for the year end 2016.
“These investigations have inevitably impacted on the the audit investigations and their progress,” the FRC said.
