KPMG may be forced to pay more than £1bn in damages for its role in auditing collapsed construction giant Carillion.
The Big Four firm has received a legal claim from the Official Receiver (OR) – a UK government officer responsible for managing Carillion’s liquidation – requesting the firm pays damages in excess of £1bn, Sky News reported.
The claim is being driven by the OR’s statutory duty to Carillion’s creditors, to maximise the recovery of any losses.
The High Court put the OR in charge of liquidating Carillion in January 2018, following the collapse of the multi-billion-pound building contractor, which saw the firm go bankrupt with debt worth £7bn.
KPMG had been responsible for auditing Carillion’s accounts for almost two decades, earning itself £29m in fees for its audit work.
At the time of its collapse, Carillion employed 43,000 people worldwide, including 18,000 in the UK.
In response to the claim, KPMG has increased the provisions it has saved up to respond to all of the claims it currently faces, from £92m to £144m, City AM understands.
The auditor will be forced to recognise the claim today, at which point the details of the claim will be made public through the court system.
City AM understands that the firm plans to defend itself against the OR’s claim. However, the firm declined to comment.
Last month, a former KPMG partner who led the audit of Carillion blamed junior colleagues for forging documents during an industry tribunal.