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Blistering report from MPs slams Big Four over 'rotten culture' at Carillion

The Competition and Markets Authority must consider breaking up the so-called Big Four accountancy firms over their involvement in the rotten corporate culture at Carillion, MPs have said in a blistering report about the company's collapse.
The final report from the select committee investigating Carillions failure earlier this year paints a damning picture of recklessness, hubris and greed among the companys senior directors, as they treated smaller companies with contempt and used aggressive accounting techniques to cover the full scale of the businesss problems.
Its collapse exposed the UK audit market as a cosy club incapable of providing the degree of independent challenge needed, the report said, adding that Carillions auditor KPMG had been complicit in the companys accounting practices.
Blistering report from MPs slams Big Four over 'rotten culture' at Carillion

Carillion went into insolvency in January

Credit:
Darren Staples
KPMG's long and complacent tenure of cursory audits at Carillion was not an isolated failure, but symptomatic of a market which works for the members of the oligopoly but fails the wider economy, the report said.
As a result, the Government should refer the audit market to the CMA with a view to breaking up the four largest firms Deloitte, KPMG, PwC and EY or splitting their audit functions from non-audit services.
Blistering report from MPs slams Big Four over 'rotten culture' at Carillion

Former finance director Richard Adam appeared in front of the committee in February

Credit:
PA
Carillions senior team, who hadcome under fire from MPs during committee hearings, could now face disqualification if the Insolvency Service finds they breached their duties as directors, the report suggested.
The Institute of Directors suggested that Carillions directors could have flouted company law by failing to consider the companys long term interests.
The report suggests that Carillions directors seemed unfamiliar with their statutory duties and this underlines the need for the professional development of directors in large companies, Roger Barker, head of corporate governance at the IoD said on Wednesday.
But Richard Adam, one of the companys former finance directors, hit out at some of the committees findings about his particular role in the company.
In a letter to the committee, he said that his evidence had been mischaracterised by Robin Ellison, the chairman of the company's pension trustees, who suggested in February that Mr Adam had thought funding the pension scheme was a waste of money.
Mr Adam, who was alsoa non-executive director of Countryside Properties but resigned in December, denied that he had ever held or expressed those views.
Carillion: the committee's key findings
MP Frank Field, chair of the committee, said the board of directors were too busy stuffing their mouths with gold to show any concern for the welfare of their workforce or their pensioners. They rightly face investigation of their fitness to run a company again.
The committees report also took aim at the Government, suggesting that ministers had nurtured a business environment which made a collapse like Carillions almost inevitable. Both the Financial Reporting Council and The Pensions Regulator were also accused of being too passive and reactive to make effective use of their powers.
Lesley Titcomb, chief executive of The Pensions Regulator, acknowledged that the balance between members of pension schemes and their employers was not always right.
But she said the organisation had changed. We are clearer about what we expect, quicker to intervene and tougher on those who do not act in the interest of members, she said, adding that TPR was in the process of implementing new regulations.
Philip Green, who was Carillions chairman from 2014 until its collapse, said the board had always sought to make decisions on the best available information and with the best professional advice, adding that they had always strived to act in the interests of the company and all its stakeholders.
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