9 Conclusions The aftermath
Preliminary conclusions concerning Carillion’s collapse and lessons to be learned The issues raised by the failure of Carillion are not an isolated stand-alone issue. Some of the problems at Carillion are endemic as they are for some of the top companies in the UK. This perception speaks to a larger narrative about the state of reporting of the UK’s largest listed companies especially those with: 1 Low profit margins; 2 High debt and/or 3 Large intangible assets. The accountancy profession’s shame
Carillion’s aggressive accounting was not exposed by its internal or external auditor. Only one person (Emma Mercer) was able to perceive a reality that eluded all the KPMG audit staff (and Deloitte staff acting as internal auditors). This is, we believe, a source of shame, not only for KPMG/Deloitte, but arguably for the whole British accountancy profession. The affair has provoked a storm of criticism levelled at accountants, much of which seems fully justified. Rachel Reeves (Chair of Parliament’s Business Select Committee) claimed that Carillion’s audit was “a colossal waste of time and money, fit only to provide false assurance to investors, workers and the public”.1 Peter Kyle (a member of the same committee) was even more scornful, commenting that he would not hire KPMG “to do an audit of the contents of my fridge”.2 The damage to the profession’s reputation and credibility has been enormous. This damage has been aggravated by KPMG UK chairman and Senior Partner Bill Michael’s “preposterous claim”3 that Carillion’s 2016 accounts presented a true and fair view. The general
