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KPMG comes under spotlight over Carillion
16 January 2018
The collapse of Carillion put its auditors of nearly 20 years, KPMG, firmly in the limelight.
Now the FRC, the accountancy watchdog, has warned it may launch an investigation into the firm’s audit of the construction and services giant.
The worry for many commentators is that the outsourcing company liquidation comes only months after being given a clean bill of health.
PQ magazine’s columnist, Professor Prem Sikka, told the Times newspaper: “The accounts for 2016 were signed off on March 1, 2017, yet by July the company was in serious trouble.
“The auditor is supposed to satisfy itself that a company is a going concern. It must look at cashflow forecasts and what kind of margin of error is built in. It is very strange that within three to four months the chief executive walked and the forecast was erroneous.”
In all Carillion issued three profit warnings last year, the first in July. CEO Richard Howson resigned, and it hired EY to carry out a review of its finances.
It has been reported that the company quadrupled its borrowing from 2010 to 2013 and ran up debts of £900m and a pension deficit of £600m.
The liquidators are PwC.
Liquidation v administration
Administration allows companies time to try to find a buyer for all or some of the business. Using this method allows as much debt as possible to be paid to creditors, and helps to improve the position of pensioners and minimise job losses. Liquidation realises a company’s assets before closing it down…
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