FRC implicates KPMG in Carillion audit breaches

The Financial Reporting Council (FRC) has delivered its initial report into KPMG’s audit of Carillion, showing the watchdog found a number of breaches made by the firm during its initial investigation.

The FRC was set to either close the case or deliver an initial investigation report, which spans KPMG’s audit of Carillion between 2014 and 2017, if breaches have been found.

In 2018, the collapse of outsourcer Carillion resulted in calls from politicians for the Big Four accountancy firms to be divided up by the Competition and Markets Authority.

In a statement released yesterday, the FRC said: “On 28 August 2020, the FRC delivered its Initial Investigation Report (IIR) in connection with its extensive investigation into KPMG’s audit of the financial statements of Carillion plc for the years ended 31 December 2014, 2015 and 2016, and additional audit work carried out during 2017.”

In response, KPMG said: “We believe it is important that regulators acting in the public interest review the audit work related to high profile cases such as Carillion and we are cooperating fully with the FRC’s investigation

“We can confirm we have received the initial investigation report but because the regulatory process is ongoing, we cannot comment further.”