The accounting watchdog has launched an investigation into the potential misconduct of two former finance directors of collapsed outsourcer Carillion.
The Financial Reporting Council will probe the conduct of Richard Adam, group finance director for nine years until 2016, and his successor, Zafar Khan, was in the post for just nine months.
It will also review the company’s financial statements and other reporting for 2014, 2015, 2016 and the first half of 2017.
The investigation into Carillion, which collapsed into liquidation on Jan 15, will be conducted by the FRC’s Executive Counsel and Enforcement division, and the watchdog said it was “liaising closely with the Official Receiver, the Financial Conduct Authority, the Insolvency Service and The Pensions Regulator to ensure that there is a joined-up approach to the investigation of all matters arising from the collapse of Carillion”.
In January, the FRC announced that it was investigating the audit of the Carillion’s financial statements by KPMG.
The company's accounting irregularities were flagged up by Emma Mercer, the company’s most recent finance director, in April 2017.
Apparently not satisfied with the response she received from bosses, she took them up with human resources director Janet Dawson.
Her concerns, which focused on how profits were booked at major projects in Battersea and Liverpool, were then discussed at a number of board meetings in May. Alison Horner, chair of Carillion’s remuneration committee, “noted that Ms Mercer appeared to be a whistleblower who did not feel she was listened to”.
As a result of Ms Mercer’s concerns, the board considered whether its accounts for the previous year were still valid, and commissioned a review of the figures.
Carillion was a major supplier to the Government, working on infrastructure projects including HS2 and maintaining hundreds of prisons, schools and military homes.
Earlier this month some of Carillion’s biggest shareholders complained they had been kept in the dark over the state of its finances.