The final report by the Work and Pensions and BEIS Committees into the collapse of Carillion has been highly critical of both the company’s board and the Big Four auditing firms. 

It has called on Government to carry out an “ambitious and wide-ranging set of reforms” to “reset our systems of corporate accountability”.

“Carillion’s collapse was a disaster for all those who lost their jobs and the small businesses, contractors and suppliers left fighting for survival,” commented Rachel Reeves MP, Chair of the BEIS Committee. “The company’s delusional directors drove Carillion off a cliff and then tried to blame everyone but themselves. Their colossal failure as managers meant they effectively pressed the self-destruct button on the company.”

“However, the auditors should also be in the dock for this catastrophic crash,” she added. “They are guilty of failing to tackle the crisis at Carillion, failing to insist the company paint a true picture of its crippling financial problems. The sorry saga of Carillion is further evidence that the Big Four accountancy firms are prioritising their own profits ahead of good governance at the companies they are supposed to be putting under the microscope.”

The report notes that successive Governments have nurtured a business environment and pursued a model of service delivery which made a collapse like Carillion’s almost inevitable, and claims measures that Government has taken to improve the business environment, such as the Prompt Payment Code, have proved wholly ineffective and need revisiting.

It has also highlighted that when Special Managers are required for an insolvency, the companies must not be given a blank cheque. The Insolvency Service should set and regularly review spending and performance criteria and provide full transparency on costs incurred and expected future expense.

Business Restructuring & Recovery Advice Glasgow, Edinburgh, London, Essex

We understand that facing up to financial challenges can be an extremely difficult and stressful time. However, you should be reassured to know that there are options available and, with the right advice and support, you can take the necessary steps to improve your situation. For further information on Business Restructuring and Recovery Advice for your company, contact us todayat an office near you.

Contains Parliamentary information licensed under the Open Parliament Licence v3.0.