The accountancy firm KPMG is to be investigated by the UK’s Financial Reporting Council over its role in the collapse of Carillion.
The business secretary, Greg Clark, welcomed the investigation, which the accounting watchdog said followed inquiries made since Carillion’s shock profit warning in July. The FRC said it would conduct the investigation, which will cover 2014 to 2016, and additional audit work carried out during 2017, “as quickly and thoroughly as possible”.
Carillion went into compulsory liquidation two weeks ago with debts of £1.3bn, a pension deficit of nearly £1bn and a host of unfinished public contracts.
The investigation will consider whether KPMG breached any rules, in particular the ethical and technical standards for auditors. Several areas of KPMG’s work will be examined including estimates and recognition of revenue on significant contracts, and accounting for pensions.
KPMG said it would cooperate fully with the FRC’s investigation and it believed it had conducted its role as Carillion’s auditor “appropriately and responsibly”.
The shadow pensions minister, Jack Dromey, said the system of oversight at Carillion had failed. He added that 28,000 workers were now paying the price with their jobs and pensions.