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Carillion inquiry calls on KPMG for evidence

Carillion power lines

MPs have given accounting giant KPMG and its three counterparts one week to share details of their last 10 years of work for Carillion.

Last week a joint inquiry into Carillion’s collapse was set up by the Commons work and pensions committee and the business, energy and industrial strategy (BEIS) committee.

Joint inquiry chairs Frank Field and Rachel Reeves have written to KPMG, along with fellow accounting giants PwC, Deloitte and EY, asking them to give the committees a breakdown of services provided to Carillion and its subsidiary companies since 2008.

In spring last year, auditors KPMG signed off Carillion as a going concern, meaning the firm would not need to liquidate in the foreseeable future. By the end of July Carillion had issued its first profit warning, foreshadowing its liquidation on 15 January.

The accounting firm had audited Carillion’s accounts since it was set up as a separate company in 1999, earning a total of £29.4M in fees.

“Conflicting tales as to who has provided professional services to Carillion over various issues means we are keen to establish a clear timetable setting out who was involved when with the company,” said Field and Reeves in a letter to KPMG.

“The latest set of audited financial accounts were signed off by KPMG with an unmodified opinion in March 2017, only for the company to go bust nine months later.”

MPs will be asking KPMG to justify its work relating to Carillion, including how its 2016 audit gave the firm a clean bill of health, with a £845M contract provision revealed three months later. KPMG has defended its work, saying it helped uncover Carillion’s financial problems.

A spokesperson for KPMG said: “Transparency and accountability are vital in building public trust in audit. We welcome the opportunity to assist the Committees’ investigations and will provide our fullest co-operation.”

On Tuesday Insolvency Service chief executive Sarah Albon, Financial Reporting Council chief executive Stephen Haddrill, Independent Trustee Services managing director Chris Martin and Carillion Defined Benefit Pension Scheme chair of trustees Robin Ellison will face questions before the commttee. 

Carillion’s ex-chief executive Richard Howson, chairman Phillip Green, finance directors Richard Adam, Zafar Khan and Emma Mercer, and interim chief executive Keith Cochrane will be questioned on 6 February.

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