Wed, Feb 14, 2018 - Page 11 News List

UK lawmakers to question firms over Carillion collapse

Reuters, LONDON

KPMG and other leading accountancy firms face serious questions over their work with failed construction firm Carillion PLC after making millions of pounds out of their relationships with the company, British lawmakers said yesterday.

Lawmakers from two parliamentary committees examining the collapse of Carillion said that KPMG had earned £29.4 million (US$41 million) from auditing the contractor’s accounts since the company was founded in 1999.

The firm signed off on Carillion’s 2016 accounts, shortly before the construction and outsourcing company announced a string of profit warnings.

Carillion collapsed last month with debts of more than £2 billion.

“KPMG has serious questions to answer about the collapse of Carillion. Either KPMG failed to spot the warning signs, or its judgement was clouded by its cozy relationship with the company and the multi-million pound fees it received,” British Department for Business, Energy and Industrial Strategy Committee Chair Rachel Reeves said. “KPMG should, as a bare minimum, review its processes and explain what went wrong.”

KPMG said it would assist the inquiry into the failure of Carillion, and will be questioned by the lawmakers on Thursday next week.

“We are committed to building public trust in audit. We take the questions that have been asked of our profession in recent weeks very seriously and we welcome the opportunity to appear before the joint committee,” KPMG said in a statement.

Lawmakers published responses from the “Big Four” accountancy firms to inquiries on their involvement with Carillion yesterday, saying that PwC, KPMG, Deloitte and EY had earned £71 million since 2008 on work related to the firm.

British lawmaker Frank Field, who chairs the Work and Pensions Select Committee, said it was “telling” that PwC was appointed to liquidate the firm, as the other three firms would have had immediate conflicts of interest.

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