Saturday, 24 February, 2018

United Kingdom accounting watchdog to investigate KPMG's audits of Carillion

BRITAIN-CONSTRUCTION-POLITICS-BANKRUPTCY Carillion's pension scheme would have costed around £2bn to offload onto to an insurance company
Nellie Chapman | 29 January, 2018, 18:43

The investigation will probe whether the auditor has breached requirements, in particular the ethical and technical standards for auditors, the FRC.

Separately, Field said evidence from Carillion trustee chairman Robin Ellison shows that Carillion has been "trying to wriggle out of its obligations to its pensioners for the last 10 years".

"Several areas of KPMG's work will be examined including the audit of the company's use and disclosure of the going concern basis of accounting, estimates and recognition of revenue on significant contracts, and accounting for pensions", said FRC.

"The challenge for the pensions regulator in this. and I'm sure they will have to answer this this situation, how much pressure should they bring to bear on the company because there is always this tension between the company and the shareholders".

Two House of Commons select committees, the Work & Pensions Committee and the Business, Energy & Industrial Strategy Committee, have also joined forces for an inquiry into the collapse of Carillion. The particularly nasty twist in this now grimly familiar tale is the mountain of debt and giant pension deficit this public services contractor leaves in the wreckage of its collapse- with an accompanying massive hit to the public purse.

Carillion, which manages a huge variety of public sector and private projects around the United Kingdom, from rebuilding Battersea Power Station to cleaning prisons, collapsed under a growing mountain of debt two weeks ago.

ONE OF THE UK's largest accounting firms, KPMG, is being investigated over the collapse of the Carillion construction group. In the end Carillion continued burning money until there was next to nothing left.

MPs have also said that trustees "negotiated away" pensions deficit contributions entirely last autumn, to enable more borrowing in order to keep Carillion afloat.

Tom McPhail, head of policy at financial management firm Hargreaves Lansdown, said of the MPs' report: "It is easy to criticise the actions of the trustees and the regulator with the benefit of hindsight".

"That gamble did not pay off but they were doing what they thought was in the best interests of pension scheme members".

What interactions has Ellison had with The Pensions Regulator?

It added that the information available about Carillion before last summer "did not highlight sufficient concern" to warrant the watchdog stepping in.

The investigation will look at all KPMG's audit work for Carillion since 2014. Have you paid into the Carillion pension scheme?