The Financial Reporting Council says it is making ‘good progress’ with its investigation into Carillion but it could be months yet before any outcome.
The Financial Reporting Council (FRC) is investigating of KPMG’s audit of Carillion (2014 – 2017) and the work of finance directors Richard Adam and his successor Zafar Khan. The main areas of focus are: contract accounting, reverse factoring, pensions, goodwill and going concern.
The FRC’s team of lawyers and forensic accountants are reviewing the audit files for the four-year period as well as other material relevant to the financial statements and audits of Carillion. The FRC expects to review tens of thousands of documents and emails in order to establish how and why audit and accounting decisions were reached.
The first of many detailed and recorded interviews and fact-finding meetings with those under investigation and other relevant witnesses have been conducted. Further interviews may be held as the responses of one interviewee often needs to be considered and analysed prior to conducting interviews of others. The FRC said that it frequently takes months to prepare, schedule and conduct a series of interviews.
The Financial Reporting Council not only sets standards for accounting and actuarial work but also polices their implementation and observance.
In an update today on its Carillion investigation it said: “FRC investigations are often complex and extensive and any findings may be challenged by experts, lawyers and, if applicable, Tribunal members. This requires detailed and rigorous legal and evidential analysis. The FRC will complete the work relating to Carillion as quickly as possible.
“The speed of the FRC’s investigations may also rely on the level of cooperation of those under investigation, audit clients and third parties (for example: other regulators and liquidators). The Carillion case is one of the largest the FRC has investigated. The FRC will not cut corners to conclude its investigations as that may compromise the integrity of any enforcement action.”
This article was published on 16 May 2018 (last updated on 16 May 2018).