Audit watchdog delays Carillion collapse findings until summer

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The Financial Reporting Council (FRC) has said that due to the size and complexity of the collapse of Carillion its investigation will need an additional six months to complete the first stage

Watchdogs at the FRC investigating the collapse of Carillion will complete the first stage by summer 2020, rather than by January 2020.

An inquiry into KPMG’s audit of financial statements issued by Carillion was launched in January 2018.

In the latest update FRC, stated: “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.

“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.”

Auditing remains under ‘active consideration’

It added: “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.”

The FRC is investigating the conduct of former group finance directors of Carillion, Richard Adam and Zafar Khan, in connection with the preparation of Carillion’s financial statements during the same period.

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