Carillion Auditors Face Formal Complaint Amidst Calls for Reform

THE FINANCIAL REPORTING COUNCIL has issued a formal complaint against KPMG and several of its current and former employees for allegedly providing “false and misleading information” in its 2016 audit of failed construction company, Carillion.

Carillion

Carillion went into forced insolvency in January 2018, with debts of £7 billion and the loss of thousands of jobs in the company and its supply chain. The firm was working on around 450 public-sector projects, including the construction of new hospitals in Birmingham and Liverpool.

Financial experts have stated that Carillion was trading while insolvent for months if not years prior to its collapse.

Now, Unite, the union, is calling for root and branch reform of the UK’s financial regulator system.

The union says that despite Carillion’s collapse – the largest corporate failure in modern times – none of the investigations into who was responsible for the company’s collapse have concluded.

Root and Branch Reform

Unite assistant general secretary Gail Cartmail said: “It is quite extraordinary that over three and half years after Carillion’s collapse no one has been found guilty and investigations are dragging on at a snail’s pace.

“The workers who lost their jobs and had their lives ruined have been entirely forgotten.

“The failure of the UK’s financial regulatory system to respond to Carillion’s collapse and to implement measures to prevent similar corporate failures in future, demonstrates why the entire system requires urgent root and branch reform.”

In a Unite report: Ending Bandit Capitalism Learning the lessons from Carillion’s collapse,  it recommends:

• The breakup of the big four audit companies, with the function of auditing being spun off into separate companies
• New rules to require auditors to have a duty of care to employees
• A reduction in the number of financial regulators with those that remain having clear roles and real legal teeth.

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