Raymond Doherty 22 Jan 2019 11:18am

FRC confirms second KPMG Carillion investigation

The Financial Reporting Council (FRC) has opened a separate investigation into KPMG over documents relating to Carillion

Yesterday the Big Four firm confirmed 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.

Three other members of the team – non-partners – responsible for the Carillion audit were also been suspended and an internal KPMG investigation was launched.

Today, the FRC confirmed that in November last year it opened a further investigation, in addition to the original probe launched in January 2018.

“The decision to open this investigation followed matters self-reported by KPMG,” the FRC said today.

It added, “The FRC continues to progress its original investigations in relation to the collapse of Carillion in conjunction with other regulators. A key area of focus has been the financial performance of Carillion’s major contracts in both the construction and services divisions, and whether Carillion management and its auditors ensured that this was appropriately reported in its financial statements. The investigations are also considering conduct relating to pension liabilities, goodwill, cash disclosures and going concern.

“Detailed interviews have been conducted with audit team members and Carillion senior executives and further interviews are planned for early 2019.”

In February last year, Meehan was hauled in front of MPs alongside KPMG’s head of audit Michelle Hinchliffe and Deloitte internal audit partner Michael Jones and quizzed over Carillion.

The fallout from the Carillion scandal sparked a raft of reviews of the UK audit profession.