Accounting rules on the recording of intangible assets should be reviewed following the liquidation of giant outsourcer Carillion, says Nauzer Siganporia FCA, audit partner at HW Fisher & Company, after external auditors KPMG identified risks with the companies valuation of goodwill in its balance sheet
The 22 February was a deeply uncomfortable day for the big firms in the accountancy world.
Two of the profession’s Big Four firms, KPMG and Deloitte, faced the Westminster equivalent of tarring and feathering. Some of their most senior partners were grilled by not one, but two Commons select committees over the work they did for the failed construction giant Carillion.
Carillion’s collapse raises awkward questions not just about its own corporate governance, but also about the work done by its external and internal auditors.
No single event precipitated Carillion’s collapse, but a clue to its parlous state lies hidden in its last annual report for the year ended 31 December 2016. On its balance sheet Carillion listed £1.67bn of intangible assets - £1.57bn of which was goodwill. This essentially represents the amount paid by Carillion in excess of actual net assets acquired when it bought other businesses.
A
