Complaints - Please scroll to the bottom of the page
Search
« The 'Three Waters' - Where To From Here? | Main | KPMG Pulls The Blinds »
Saturday
Jun162018

KPMG Features in Major UK Collapse

The muli- billion pound collapse of Carillion - a giant takeover and construction operation, and which has been subject to a British Government enquiry has showed up a great many causes of company failure that  have resonance right here,

One aspect that caught my eye form a story by Brain Gaynor in today's NZH  that should be causing an equally strong reaction in this country is that related to audit and external advice - the hook by which all major boards seem to escape responsibility for their decisions

"Much of the report's harshest criticism was directed at Carillion's auditors and external advisers.

KPMG was Carillion's external auditor for 19 years, pocketing £29m in the process.

On July 10, 2016, just 31 days after Carillion had paid a £55m dividend, the company announced a massive £845m writedown of its major construction contracts.

The parliamentary report had this to say about KPMG: "Not once during that time [19 years] did they qualify their audit opinion on the financial statements.

Yet, had KPMG been prepared to challenge management, the warning signs were there in highly questionable assumptions about construction contract revenue and the intangible asset of goodwill accumulation in historic acquisitions.

"In failing to exercise — and voice — professional scepticism towards Carillion's aggressive accounting judgments, KPMG was complicit in them."

KPMG wasn't the only Big Four accounting firm involved with Carillion. Deloitte was paid £10m as internal auditors and EY £10.8m for failed turnaround advice last year."

The involvement of the 'big-four accounting firms (and I would suggest similarly the Auditor General here for reasons I have delineated countless times on my posts), the failure of their audits and advice, and the  norms associated with qualifying accounts of major corporations (and Councils here!) are reflected generally in this Report that Gaynor has highlighted.

My confidence in the AG here has been shattered by the "not our responsibility" response to my drawing attention to the cavalier way in which our Council has dissipated $118m from its depreciation reserves, meaning that a balance of $6.4 curently remains for renewals of our infrastructure assets. 

This disgraceful state of affairs, instigated during Leach's reign, has been inadequately highlighted by the current regime, even if recognised by a rapid reversal of policy in the TYP to be adopted at the end of this month

I will deal the consequences of this action in my next post, highlighted by action that the Government appears intent on taking to review the district council handling of the 'three waters' over the entire country, and that may well result in ours, and in this and every other council becoming redundant. The Government is clearly intimating that the current situation is untenable, regardless of the lack of action by the Auditor General. We have poorly served by both the elected amateurs, and the so-called professionals at every level. 

It is failure with huge ramifications that are about to 'come home to roost.'

 

 

 

PrintView Printer Friendly Version

EmailEmail Article to Friend

Reader Comments

There are no comments for this journal entry. To create a new comment, use the form below.

PostPost a New Comment

Enter your information below to add a new comment.

My response is on my own website »
Author Email (optional):
Author URL (optional):
Post:
 
Some HTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>