The UK’s accountancy watchdog has said it has delivered an initial report of KPMG’s audit of collapsed outsourcer Carillion, indicating it found a number of breaches made by the firm.
After a preliminary investigation, the Financial Reporting Council would either close the enforcement case or, if breaches have been found, deliver an initial investigation report.
The report spans KPMG’s audit of Carillion between 2014 and 2017. The FRC would normally not publicly say if it had delivered a report, but opted to on this occasion given the case’s high profile.
Carillion’s collapse in 2018 prompted calls from politicians for the Big Four accountancy giants to be broken up by the Competition and Markets Authority.
Failures by the firms have continued to appear since that time, including most recently with the collapse of Wirecard as a result of widespread fraud. It had been audited for a number of years by EY.
“We believe it is important that regulators acting in the public interest review the audit work related to high profile cases such as Carillion and we are cooperating fully with the FRC’s investigation,” KPMG said in a statement.
“We can confirm we have received the initial investigation report but because the regulatory process is ongoing, we cannot comment further.”
The FRC is now awaiting KPMG’s response to the report before deciding whether to continue with the enforcement case.
It comes as the Big Four firms will be informing the FRC next month on how they will ring fence their UK audit arms to help improve standards.