The committees said they will be investigating how a company that was signed off by KPMG as a going concern in spring 2017 could go into liquidation with a reported £5bn of liabilities and just £29m left in cash less than a year later. 

The committees are also initially calling in a series of former directors of Carillion, the Insolvency Service, as well as the FRC.

In 2016, Carillion paid dividends to its shareholders of £78.9m from 2015's profits: exceeding the £73m it generated in cash from operations. It paid a further dividend of £54m in June 2017 – just one month before its first profit warning.

MPs say they are also concerned about the company’s pension scheme. Despite a rising pension scheme deficit, Carillion paid in only £51m in 2016, £3m lower than the previous year, and £27.9m less than it allocated for dividends over the same period.

The headline pension deficit figure reported in company accounts for the 29,000 member scheme was £587m as of the first half of 2017, up from £318m in 2015. During the same period, net borrowing within the company ballooned from £170m to £571m.

Frank Field, chair of the work and pensions select committee, said: ‘Another day, another company goes bust hot on the heels of a clean bill of health from a Big Four financial services firm. The particularly nasty twist in this now grimly familiar tale is the mountain of debt and giant pension deficit this public services contractor leaves in the wreckage of its collapse– with an accompanying massive hit to the public purse.

‘It must also be time now for the auditors who cosily signed off this disaster-in-the-making as a “going concern” less than a year ago to begin to account for themselves.’

The FRC will appear at the inquiry’s first evidence session on 30 January. Other witnesses will come from the Insolvency Service and the trustees of the Carillion pension scheme.

On 6 February, MPs will hear evidence from Carillion’s past and present chief executive, past and present finance director, and its chairman.

Rachel Reeves, chair of the BEIS committee said: ‘In the wake of the BHS scandal, Carillion has the hallmarks of another corporate governance failure with directors asleep at the wheel while the business went off a cliff, in this case leaving jobs, pensions and public services under threat and a host of suppliers out of pocket. How is it that so many warning signs were ignored by the company and the government?

‘What were the Carillion board and senior management doing to address the spiralling problems at the company? Why are the regulatory bodies stepping in only after Carillion’s collapse?

‘As a committee we will also want to explore the executive pay arrangements at Carillion, the potential cost to the taxpayer of the insolvency, and the role of both directors and non-executive directors in the company’s collapse.’

Joint Work and Pensions/ BEIS Committee session

The joint hearing is scheduled for 9.15 on 30 January. Witnesses include:

• Stephen Haddrill, chief executive officer, Financial Reporting Council
• Sarah Albon, chief executive officer, The Insolvency Service
• Chris Martin, managing director, Independent Trustee Services Ltd
• Robin Ellison, chair of trustees of Carillion Defined Benefit Pension Scheme 

Proceedings will be broadcast live. Details here

Report by Pat Sweet