Carillion Auditors Slammed For Not Completing Checks on Giant

22nd February 2018.

Carillion auditors, KMPG and Deloitte are to be questioned by MPs over their role in the construction group’s collapse.

When a company as large as Carillion collapses, blame is laid on all areas of its business structure. From its accounts team to its auditors; it’s a collaborative disaster. It’s fair to say, however, that a successful audit team could have seen this coming. Like credit managers, who scrutinise credit reports and credit scores to determine a company’s success, audits look for deficiencies that could cause the business and its employees harm. Carillion utilised the auditing skills of two of the big four UK auditors, KPMG and Deloitte, who are to be questioned by a Government committee this week over their role in the collapse of the construction giant.

Here at the Credit Protection Association, we always encourage our members to credit check all their customers. This means using our CPA-approved credit reports and monitoring software to keep an eye on them throughout the whole business relationship. In order to protect your business and everyone involved, it is essential you know everything about who you are doing business with.

Two select committees will question Carillion’s auditors KPMG today [22nd February), as well as its internal auditors Deloitte and the Pensions Regulator, as part of a joint inquiry into the crisis.

The Work and Pensions, and Business Committees said they had a “growing pile of evidence” that those involved with Carillion, including investors and hedge funds, saw warnings of its demise.

“So why didn’t the auditors?”, said a statement released ahead of today’s hearing.

Labour MP for Leeds West, Rachel Reeves, who chairs the Business Committee, said that Carillion had “unsustainably high levels of debt”, but the reality of its financials were kept hidden by its auditors.

The auditors’ annual reports said nothing of the company’s troubles, and Ms Reeves claims they failed to portray a “true sense” of the assets and liabilities of the business.

“KMPG will have to explain why they signed off on accounts which appear to have borne so little relation to reality”, the Labour MP added.

More than 1,000 former Carillion workers have lost their jobs since the company went into liquidation last month. The Official Receiver announced that 7,610 jobs have been saved, including 942 following agreements over the past week to buy contracts held by Carillion.

When a company as large as Carillion collapses the resulting damage spans across the whole supply chain. It is essential, therefore, that every business owner scrutinises all customers and their liability to cause the business harm- not just for your sake, but for the sake of all those who do business with you. Carillion’s auditors mistakingly believed that because Carillion held such a powerful position, they were exempt from failure. This is a common presumption and we see it disproved every day. Size really doesn’t matter when it comes to insolvencies. If you’re larger, you simply have further to fall.

Here at the Credit Protection Association, we boast a range of credit management and debt recovery services to return cash to our members as well as protect them from the next Carillion disaster. Our credit reports are thorough and allow our customers to check up on their customers, as well as their directors. When it comes to credit management, it always pays to be nosy.

Do you worry about your customers? Are you a victim of Carillion? Get in touch with CPA with the details below.