MPs investigating Carillion’s liquidation have asked the big four audit firms to reveal their working links with the collapsed services giant Carillion.
According to Sky News, audit firms PwC, KPMG, EY and Deloitte have all been asked to reveal their links with Carillion since 2008.
On Wednesday the work and pensions and business committees began a joint investigation of Carillion, including an audit of the company.
Frank Field, chairman of the work and pensions committee, said in launching the investigation: “Another day, another company goes bust hot on the heels of a clean bill of health from a Big Four financial services firm. The particularly nasty twist in this now grimly familiar tale is the mountain of debt and giant pension deficit this public services contractor leaves in the wreckage of its collapse—with an accompanying massive hit to the public purse.
“It must also be time now for the auditors who cosily signed off this disaster-in-the-making as a ‘going concern’ less than a year ago to begin to account for themselves.”
Carillion, a construction company and provider of support services, went into liquidation just after Christmas with £1.7bn in debts. The company had 450 contracts in the public sector.
Rachel Reeves, chairman of the House of Commons business committee, said this week that Carillion was a “corporate governance failure”.
She signalled that the committees’ probe would focus on the actions of the board.
“In the wake of the BHS scandal, Carillion has the hallmarks of another corporate governance failure with directors asleep at the wheel while the business went off a cliff, in this case leaving jobs, pensions and public services under threat and a host of suppliers out of pocket. How is it that so many warning signs were ignored by the company and the government?
She added: “What were the Carillion board and senior management doing to address the spiralling problems at the company? Why are the regulatory bodies stepping in only after Carillion’s collapse?
“As a Committee we will also want to explore the executive pay arrangements at Carillion, the potential cost to the taxpayer of the insolvency, and the role of both directors and non-executive directors in the company’s collapse.”
Hearings will begin on 30 January with MPs questioning representatives from the Financial Reporting Council, the UK’s audit and governance watchdog, the Insolvency Service, and members of Carillion’s pension fund board of trustees.