Carillion collapse: accounting watchdog investigating KPMG
Work and Pensions Committee querying deferred pension contributions in separate probe
The UK’s Financial Reporting Council (FRC) is investigating KPMG over its accounting role in the collapse of Carillion under a £1.5bn debt pile.
The probe will cover the period between 2014 and 2017, and will look at whether the auditor breached any “ethical and technical standards”. The FRC will also look at how KPMG recognized revenue on significant contracts and its accounting for pensions.
The watchdogs has powers to impose unlimited fines on accounting firms in cases of wrongdoing, the Financial Times says.
In an emailed statement to Bloomberg, KPMG said: “Transparency and accountability are vital in building public trust in audit. We believe it is important that regulators acting in the public interest review the audit work related to high profile cases such as Carillion.”
The Work and Pensions Committee is also questioning how Carillion managed pension investments, amid allegations that the collapsed construction giant “wriggled out” of payments to company schemes while paying shareholder dividends and executive bonuses. Last year’s contributions were deferred until 2019, the BBC reports.
Carillion - which held government contracts for everything from jails and hospitals to the HS2 high-speed rail project - filed for compulsory liquidation earlier this month with a pension deficit of almost £1bn. Up to 43,000 jobs are at risk worldwide.