Carillion has accelerated its efforts to bring a civil lawsuit against KPMG, preparing to mount a negligence claim over previous audits and sue the accountancy giant for \u00a3250m.\r\n\r\n\r\n\r\nAccording to the Financial Times, liquidators for the collapsed construction group are actively seeking a court order to obtain documents pertaining to the audits carried out between 2014 and 2016.\u00a0\r\n\r\nFollowing the audits, a civil servant who oversaw the liquidation of Carillion has now claimed that the outsourcer\u2019s board of directors believed the business was \u201cprofitable and sustainable\u201d as a result of KPMG\u2019s audit results.\u00a0\r\n\r\nAs a result of opinions arising from the series of audits, Carillion directors proceeded to pay out almost \u00a3250m in dividends and advisory fees over a two-year period.\u00a0\r\n\r\nThe claim was made public today (12 May) following the submission of a court application to gain access to KPMG\u2019s audit documents.\u00a0\r\n\r\nKPMG has reportedly rejected the application for these documents, according to the Financial Times. However, a court filing by lawyers for the civil servant argued that these files would be \u201ccore evidence\u201d going forward.\u00a0\r\n\r\nThe filing said: \u201cKPMG\u2019s breaches of contract and duty caused [Carillion] to incur losses which it would not have done if it had been aware of its true financial position.\u201d\u00a0\r\n\r\nAccording to the lawyers, KPMG could be liable for \u00a3234.2m in dividends that were paid out to the construction group\u2019s shareholders between 2014 and 2016. In addition, it may also be liable for \u00a317m in advisers\u2019 fees.\r\n\r\nThe filing notes that such fees \u201cwould not have been paid if the misstatements in the financial statements had been detected by KPMG\u201d.\u00a0\r\n\r\nThe proposed claim alleges that misstatements in the accounting of revenue and liabilities of contracts went undetected by the accountancy firm, who was \u201cnegligent in its accounting for goodwill\u201d.\u00a0\r\n\r\nThis will mark the first time that a large audit firm could be taken to court in an effort to receive compensation from a major insolvency.\r\n\r\nThe construction giant had initially issued a profit warning four months after KPMG signed off on its accounts in 2017, and collapsed only five months later in January 2018. The outsourcing group owed more than \u00a31.3bn to its banks and had a pension deficit of \u00a3800m.\u00a0 \r\n\r\nA later parliamentary inquiry into the collapse of the firm claimed that KPMG was \u201ccomplicit\u201d in its collapse, having \u201cmissed warning signs in its financial statements in relation to contract revenue and goodwill\u201d.\u00a0\r\n\r\nThe Financial Reporting Council (FRC) first announced it would investigate KPMG\u2019s audit of the financial statements of Carillion in January 2018. Statements for the years ended 31 December 2014, 2015 and 2016, as well as additional audit work in 2017, were all investigated by the council.\u00a0\r\n\r\nHowever, the council confirmed that the first stage of its investigation will now be completed by summer 2020, rather than by January 2020. It alleged it requires more time to investigate the collapse of the construction services company due to the \u201ccomplexity\u201d of the case.