UK Watchdog To Investigate KPMG Over Carillion Auditing

January 30, 2018
UK Watchdog To Investigate KPMG Over Carillion Auditing January 30, 2018 Clive Nelson https://plus.google.com/110107075468979879828/

Accounting firm KPMG will be investigated by the UK industry watchdog in regards to its auditing of accounts of the collapsed construction firm Carillion. The construction firm was connected to the renovation of the Battersea Power station as well as the HS2 rail link. The construction giant had been making headlines ever since its shock profit warning in July 2017.

Carillion was in the newly earlier this month when the company announced that they had gone into compulsory liquidation with debts of £1.3 billion, several unfinished contracts as well as a pension deficit of nearly £1 billion.

Carillion had employed at one point 19,000 people in the UK and had a strong market reputation and its sudden decline came as a surprise to many. The surprise collapse of the company in January came about after several meetings with creditors failed in the wake of announcements that banks would no longer lend the construction firm any more money. The news of Carillion’s eventual collapse also surprised its employees as the firm had been awarded a £300 million contract as the main contractor in a Manchester property development.

Financial Times

The Financial Reporting Council (FRC) states that it would look into if KPMG breached any relevant requirements with regards to ethical and technical standards for auditors. The FRC announced that they would investigate the years covering 2014 to 2016 as well as additional audit work that was done by KPMG during 2017.

The collapse will leave thousands of employees without work and their pensions and savings in doubt. The news of the FRC investigation comes off a statement from the chair of Commons Work and Pensions committee Frank Field who accused Carillion of trying to “wiggle out” of its obligations to its pensioners for the last ten years. Field claims that that instead of dealing with its growing pension deficits Carillion instead paid hundreds of millions of pounds in dividends to its shareholders.

In a statement, Jack Dromey, shadow pensions minister said

The responsibility falls upon the government, the regulators, the board, the trustees and the asset managers. It was a bonanza for the board and for the shareholders and that cannot be right. There needs to be fundamental reform to pension oversight, but in the here and now the trustees need to be called to account

The UK watchdog’s investigation of KPMG is to see if the auditors botched things up and could not have issued warnings based on their audits carried out during the last couple of years.

About the Author

Clive Nelson

Clive Nelson Author

Hi, my name is Clive Nelson and welcome to Traders Bible. Just to tell you bit about myself…I have been trading FX and binary options for the best part of 10 years now. After graduating with honours in economics, I began working for an investment bank in New York as an assistant trader before working my way up. After a few years, I went on to work as a broker in London, England and then eventually came back to the U.S to work in a hedge fund, where I manage $800 million of my clients’ investments. There have been times over the course of my career where I’ve had to take a hit, but I’ve accepted that losing is part of the game, it’s a learning curve. I’ve learnt from my mistakes and you don’t have to make the same errors I did. A lot of my education came from when I was a broker and this is why I’m here to tell you that Traders’ Bible offers you the foundations of how to become a great trader.


Related Articles

Swiss Franc strengthens on strong retail sales, PMI data

Better than anticipated flash manufacturing PMI and strong demand for homes enabled the US dollar to climb against the Swiss

SEC Chief Urges Cryptocurrency Investors To Exercise Caution

US Securities and Exchange Commission (SEC) Chairman Jay Clayton released a statement this week, warning everyone who are currently trading

Bank of England Looks To Protect London’s Financial Status

The United Kingdom and the European Union announced last week that they had reached an agreement to move forward with