The accounting regulator was slammed by MPs as “toothless” and “useless” this morning, during the Parliamentary inquiry into why Carillion collapsed months after being assessed as a going concern.
Financial Reporting Council (FRC) chief executive officer Stephen Haddrill admitted that the FRC was unable to “take action to change direction” of the failing company, as the inquiry’s panel of MPs accused it of being ineffective. The joint inquiry is being run by the Commons business, energy and industrial strategy and the work and pensions committees.
The FRC confirmed yesterday that it is investigating KPMG’s audit work for Carillion from 2014 to 2016, and extra work carried out in 2017.
However, inquiry panel members said the FRC should have taken action earlier to prevent the collapse of the company, which was forced into compulsory liquidation 15 January.
Peter Kyle MP said: “You [the FRC] weren’t getting inside that company, rolling your sleeves up and having a look at how it was being run, or being opinionated at the time when it really mattered.
“What is the point of your organisation, if it can’t turn around an organisation at the point that it would make a difference, rather than just trying to mop up the pieces afterwards.”
The actions of Carillion directors, who are set to face the inquiry next Tuesday, will be examined as investigators consider whether misconduct led to the construction giant’s collapse.
The Insolvency Service confirmed to the inquiry today that Carillion did not have sufficient assets to cover the costs of liquidation.
The service’s chief executive officer Sarah Albon said the Official Receiver’s inquiry could take about 21 months, but is being fast tracked due to its “public significance”.
The scope of the Official Receiver’s investigation is not yet clear, she said, as the process of formal insolvency is set to continue for another few weeks. So far 16 out of 199 UK-based Carillion companies are insolvent, but this number is expected to rise.
She said the “incredibly poor standard” of the companies record keeping had made it hard to identify how many directors would be targeted by the investigation.
The investigation will look at directors who worked at Carillion up to two to three years ago and will have the power to reclaim money “in the event that misconduct is found”.