ICSM News: Carillion’s auditor KPMG that left thousands out of pocket due to ‘poor work’ receives £21m fine (but nobody goes to jail)

By Harry Mottram: it was the scandal that rocked the construction industry and shafted thousands of  contractors, builders, suppliers and companies out of billions of pounds. The Financial Reporting Council, which regulates accountants has fined construction giant Carillion’s auditors KPMG £21 million after finding that when it vetted the company's accounts repeatedly from 2014 to 2017 it failed to spot its spiralling problems.

Ian Carrrotte of ICSM said it was a shocking report. He said: “Many of those who lost thousands of pounds will be wondering why nobody has gone to prison for such incompetence. The fine is huge by any standards but it’s small beer for the likes of KPMG.”

The BBC reported: “The FRC said Carillion, a major construction firm with around 12,000 staff, had been a very important client for KPMG and key members of its audit team which created a ‘risk to their objectivity’. It singled out Peter Meehan, a former KPMG partner who no longer works for the firm, saying he and his team had occasionally signed off audit reports before completing all of the work involved. He has personally been fined £500,000, reduced to £350,000 to reflect his co-operation with investigators. Another partner, Darren Turner, has been fined £100,000 which was reduced to £70,000 for failures in a 2013 audit. In both cases, the FRC said the men had not been dishonest, although Mr Meehan's team had occasionally made ‘intentional, deliberate or reckless’ mistakes. The regulator said the breaches undermined credibility and public trust in the auditing process.”

FRC boss Richard Moriarty said: "The collapse of Carillion had a significant and painful impact on employees, pensioners, investors, critical infrastructure projects, local communities and taxpayers.”

Ian Carrotte said it was beyond comprehension that extremely well paid professionals could be so bad at their job. He said: “And worse still KPMG tried to pull the wool over the eyes of FRC last year by misleading them about their work for Carillion like school kids pretending they’d done their homework. They were forced to pay £14m as a result. Yes Howson has a ban from being director and fines were handed out but there needs to be tougher sanctions – for what many of the suppliers believe was nothing short of criminal activities.”

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ICSM, The Exchange, Express Park, Bristol Road, Bridgwater, Somerset TA6 4RR. Tel: 0844 854 1850. www.icsmcredit.com. Ian.carrotte@icsmcredit.com