An inquiry has been launched into KPMG’s audit of financial statements issued by Carillion leading up to the company’s profit warning issued in July 2017
The Financial Reporting Council’s Enforcement Division will consider whether the auditor breached “any relevant requirements, in particular the ethical and technical standards for auditors”. The probe will cover 2014 to 2016, as well additional work carried out in 2017.
It will examine several areas of KPMG’s work, including the audit of the company’s use and disclosure of the ongoing concern basis of accounting, estimates and recognition of revenue on significant contracts, and accounting for pensions.
In addition, the FRC said it is carrying out urgent enquiries into the conduct of Carillion’s in-house accountants in connection with the preparation of its financial statements and other financial reporting obligations under the Accountancy Scheme.
KPMG has said it will cooperate fully with the FRC investigation.
“We believe that we conducted our role as Carillion’s auditor appropriately and responsibly,” a spokesman said.
“We believe it is important that regulators acting in the public interest review the audit work related to high-profile cases such as Carillion.