The Financial Reporting Council (FRC) has said its lawyers and accountants are making “good progress” in their investigation into Carillion, but that it won’t “cut corners” to speed up its completion.
The FRC is investigating the contractor’s former finance directors Richard Adam and Zafar Khan alongside the financial audits carried out by KPMG between 2014 and 2017.
The financial watchdog said the speed of its probe, said to be one of the largest in its history, would depend on the co-operation it received from those under investigation, audit clients, and other regulators and liquidators.
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The FRC added that it would not “cut corners to conclude its investigations”, as that would have the potential to “compromise the integrity of any enforcement action”.
It warned that investigations were often complex, with findings challenged by experts and lawyers, but that its team would endeavour to complete work “as quickly as possible”.
The FRC said it was focusing on five areas as part of its investigation into Carillion’s collapse: contract accounting; reverse factoring; pensions; goodwill; and going concern.
FRC ongoing actions
- Reviewing the audit files for 2014-17 as well as other material relevant to the financial statements and audits of Carillion, including accounting documents produced by the company and correspondence from the period. The FRC expects to review tens of thousands of documents and emails to establish how and why audit and accounting decisions were reached.
- Collaborating with the Insolvency Service, the FCA and The Pensions Regulator. As liquidator, the Insolvency Service has access to the bulk of the Carillion material and work is ongoing to ensure relevant material is shared between the regulators.
- The first of several 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 need to be considered and analysed prior to conducting interviews of others, the FRC said. It frequently takes several months to prepare, schedule and conduct a series of interviews, it added.
The news comes on the day MPs on the Carillion joint inquiry issued their damming final report, which called on the Insolvency Service to examine whether executives at the firm should be barred from future roles due to “potential breaches of duties under the Companies Act”.
The Insolvency Service currently has an open investigation into the conduct of the company’s bosses, which was fast-tracked by business secretary Greg Clarke in the aftermath of the firm’s liquidation.