When it first announced its probe in January last year, the regulator said it would investigate the Big Four firm’s audit work at the collapsed company for the years ended 31 December 2014, 2015 and 2016, and additional audit work carried out during 2017.
Today, it said it will also look into the financial statements for the year ended 31 December 2013.
In response a KPMG spokesperson said, “Transparency and accountability are vital to building public trust in audit. We believe it is important that regulators acting in the public interest review the audit work related to high profile cases such as Carillion. We will continue to cooperate fully with the FRC’s investigation.”
The FRC is also investigating the conduct of Richard Adam and Zafar Khan, former group finance directors of Carillion and ICAEW members.
The regulator decided to investigate the firm following enquiries made since a profit warning in July 2017. Carillion filed for compulsory liquidation with £7bn in liabilities in early 2018 after talks with potential lenders failed, putting thousands of jobs and businesses at risk.
Last month, KPMG announced it had suspended Peter Meehan, the partner responsible for the now-collapsed construction services company, over concerns he had backdated documentation provided to the FRC for its Audit Quality Review into aspects of the Carillion audit for the year ending 2016.
It had previously been hauled in front of MPs alongside KPMG’s head of audit Michelle Hinchliffe and Deloitte internal audit partner Michael Jones.
All the Big Four firms have been criticised over their role in the collapse of the construction firm. PwC, which was appointed as administrator, has been accused of “milking the cash cow dry” after it was revealed it is charging £44.2m for one year’s work as special managers.
KPMG was paid a total of £20.2m for its work on Carillion since 2008, with £16.8m coming from the company itself and £3.4m from government work.
PwC was paid most of the four firms in fees with a total of £21.1m, including £8.5m from Carillion, £6.5m from government and £6.1m from pension schemes.
EY was paid £18.3m from Carillion over the last 10 years (£15.6m from the company and £2.7m from government) and Deloitte was paid £12m (£10.3m coming from the company and £2.7m from government).