KPMG boss confident in Carillion audit despite partner suspension
KPMG’s UK boss said the firm remains confident in the quality of its audit work for collapsed construction firm Carillion, despite suspending a partner over concerns related to falsified documents.
Earlier this month, the Big Four audit confirmed it had suspended the top audit partner Carillion, Peter Menshan, along with three other non-partner members of the auditing team, over concerns documentation provided to the regulator had been backdated.
Bill Michael, who became the firm’s chair and senior partner in 2017, told MPs: “What we have discovered, we do not think has impacted the audit opinion on Carillion”.
Read more: Watchdog investigation into KPMG’s Carillion audit at ‘critical stage’
He told members of the Business, Innovation and Industrial Strategy (Beis) Select Committee “the particular case for suspension related to a specific action that we uncovered during our review,” adding KPMG had “found irregularities” with documents passed to the audit watchdog for quality assurance purposes, as part of an ongoing internal investigation.
KPMG, which was the external auditor of Carillion when the construction outsourcer went bust early last year, has been criticised for failing to flag the firm’s massive debt problems.
The Financial Reporting Council (FRC), which is probing KPMG’s work for Carillion, issued an update last week following “significant public interest” in the case.
It said investigations were at a “critical stage”, and expected them to continue “well into 2019”.
Read more: Audit’s perfect storm: How bean counters found themselves at the centre of a public uproar
KPMG has been fined several times in recent years, including £2.1m in August over its audit of fashion retailer Ted Baker. In June, the FRC, which regulates the sector, said the firm’s audits had been undergoing an “unacceptable deterioration” in quality.
Asked about the FRC’s findings today, Michael said: “Those results are unacceptable, and we are working hard to resolve them”
During a Beis committee hearing into Carillion’s collapse last year, Labour MP Peter Kyle told a senior KPMG audit partner: “I wouldn't trust you to audit the contents of my fridge.”