Outcome of UK probe into Carillion audit delayed until summer

LONDON (Reuters) - Findings from an investigation into KPMG’s audit of collapsed UK builder Carillion won’t be available until the summer, Britain’s accounting watchdog said on Friday.

FILE PHOTO: The logo of KPMG, a professional service company, is seen at the company's head offices at La Defense business and financial district in Courbevoie near Paris, France. May 16, 2018. REUTERS/Charles Platiau/File Photo

The Financial Reporting Council (FRC) said two years ago it had opened an investigation into KPMG’s auditing of Carillion.

The FRC said in an update on Friday that the investigation was well advanced, having reviewed a substantial volume of material, including papers from internal and external auditors.

“An independent expert is now considering our analysis in order to provide an expert opinion on whether there were breaches of auditing standards,” the FRC said.

The FRC is also investigating the conduct of two former Carillion finance directors.

The scale and complexity of the case was “exceptional”, covering audits for four years, the watchdog said.

“The FRC therefore currently expects to complete the first stage of its investigation by summer 2020, rather than by January 2020,” it added.

The collapse of Carillion prompted UK lawmakers to demand a shake-up of auditing in Britain, a sector dominated by KPMG, EY, Deloitte and PwC, known collectively as the Big Four.

Three government-backed reviews have made recommendations to reform the audit market and scrap the FRC, some of whose past investigations have drawn criticism for the many years taken to reach a result.

The FRC, described by lawmakers as too timid in dealing with auditors, already has a new CEO and Chair. It is set to be replaced by a more powerful regulator under legislation expected this year.

Reporting by Huw Jones; Editing by Alex Richardson