23 January 2019 | Herpreet Kaur Grewal
The Financial Reporting Council (FRC) has provided an update on its investigations in relation to Carillion.
The FRC is investigating KPMG's audits of Carillion (2014-2017) and the conduct of two former finance directors, Richard Adam and Zafar Khan.
Additionally, in November 2018, the FRC opened a further investigation relating to the provision of materials to the FRC by KPMG in connection with the FRC's Audit Quality Review into aspects of the audit of Carillion for the year-end 2016. The decision to open this investigation followed matters self-reported by KPMG.
The FRC continues to progress its original investigations in relation to the collapse of Carillion in conjunction with other regulators.
A key area of focus has been the financial performance of Carillion's major contracts in both the construction and services divisions, and whether Carillion management and its auditors ensured that these were appropriately reported in its financial statements.
The investigations are also considering conduct relating to pension liabilities, goodwill, cash disclosures and going concerns.
The FRC also said that it has "obtained and is analysing very significant quantities of documents relating to these areas. Detailed interviews have been conducted with audit team members and Carillion senior executives and further interviews are planned for early 2019".
The FRC meets regularly with case teams from other agencies to identify issues of common interest and ensure that relevant documents and information are shared to the extent permissible.
The matters being investigated by the FRC are "complex and are expected to continue well into 2019. They are a critical stage in the process, the findings of which form the bedrock on which any regulatory proceedings are based. The FRC is committed to completing its investigations promptly and thoroughly".
The FRC launched its original investigations in January and March 2018 and provided an initial update on those investigations in May 2018.