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Carillion: Audit

Question for Department for Business, Energy and Industrial Strategy

UIN HL7505, tabled on 29 July 2020

To ask Her Majesty's Government whether (1) KPMG, and (2) the Institute of Chartered Accountants in England and Wales, are involved in any of their work dealing with international accounting standards and dividends payments; and if so, what assessment they have made of whether such involvement is appropriate in the light of reports that the Official Receiver is seeking to take action against KPMG over alleged negligence in its audits of Carillion.

Answered on

6 August 2020

The Government announced as part of its response to the consultation on Insolvency and Corporate Governance that it would look further at options for strengthening of the legal framework governing dividend payments in a proportionate way. In that context, the Department asked the ICAEW for technical advice on ways in which potential new distributable reserves disclosure requirements might be framed. The ICAEW was also asked to consider how its Guidance on Realised and Distributable Profits (Tech 02/17BL) might be simplified and clarified. It has subsequently published an Introduction to the Law on Dividends which includes an explanation of the role and content of its technical guidance.

The Government believes that it is appropriate to receive views and advice on accountancy matters from a wide and balanced range of expert stakeholders including the ICAEW and KPMG. In relation to international accounting standards, members of KPMG and ICAEW have attended meetings and have input into discussions and consultations since the standards were introduced in the UK.

Consistent with his duties as a liquidator, the Official Receiver has investigated whether Carillion may have a claim against KPMG for losses resulting from the conduct of its statutory audit and is considering pursuing a claim in this regard. It would be inappropriate to comment further at this stage.

Answered by

Department for Business, Energy and Industrial Strategy