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KPMG U.K. Chairman Taking Heat for Defending Carillion Audit

An article published today by The Times in which KPMG U.K. Chairman Bill Michael defended the firm’s audit of Carillion is getting some reaction on Twitter—good for the newspaper, bad for Michael and KPMG.

The article states:

The chairman of KPMG has hit back at MPs in charge of the inquiry into the collapse of Carillion who called the firm’s audit of the outsourcing group “complacent”.

Bill Michael, who took over running KPMG in September, months before Carillion went into liquidation, said the accusation “does not reflect the hard work and commitment of the Carillion audit team”. He said he “respectfully disagreed” with the MPs’ criticism and defended KPMG’s role as auditor.

KPMG was paid £29 million to audit Carillion for 19 years. The Big Four firm was accused by Rachel Reeves and Frank Field, who chaired the parliamentary inquiry, of “complacently signing off the directors’ increasingly fantastical figures” and of “failing to exercise professional scepticism” towards the accounts.

Carillion, which constructed and managed government projects, had contracts covering projects including hospitals and high-speed rail, but collapsed after failing in last-ditch efforts to get support from lenders and the government, according to a Bloomberg report.

Michael’s comments prompted an outcry from some on Twitter, including Reeves, who said his defense of the Carillion audit does not reflect well on KPMG:

We’ll continue to update this article.

[The Times]

Image: Shutterstock/Isabelle OHara