Carrilion in trouble
Discussion
Some of the failings prompting the insolvency may be common within the sector, however it is the sheer scale of the Company that has caused the devastation with thousands of workers and goodness knows how many SME left ‘out of pocket’, latest example to the tune of 200k.
Companies left to grow to big seem to be a growing problem, no pun intended.
Companies left to grow to big seem to be a growing problem, no pun intended.
Blue62 said:
Surely it's time to accept that industry needs more regulation, not less. When businesses are given too much licence this is the result, it's greed and human nature.
Thought this for some years, not just the building industry. One problem is the lack of deterrent for Boards to act with impunity and arrogance, seen several big name examples in recent times. The mess .left behind for others to clear up takes years and yet the perpetrators are allowed to waltz off into the sunset!crankedup said:
Thought this for some years, not just the building industry. One problem is the lack of deterrent for Boards to act with impunity and arrogance, seen several big name examples in recent times. The mess .left behind for others to clear up takes years and yet the perpetrators are allowed to waltz off into the sunset!
I’ve a feeling that they will have bonuses and pensions stripped from them - all the red room staff. However how far back do you go? When did the rot start? Do you go after a red room person who is retired years and years ago and turn them to state pension only and try to take their bonuses away?
That’s the issue - the focus is on the ones where the plates stop spinning.
Big Four accountancy firms plan for forced break-up
https://www.ft.com/content/6c07f5d8-591b-11e8-bdb7...
The Big Four accountancy firms have drawn up contingency plans for a break up of their UK businesses, an option politicians and regulators are increasingly pushing to solve conflicts of interest embedded in the industry.
The pressure on the four firms that dominate the sector — KPMG, Deloitte, EY and PwC — to prepare for a forced break-up has increased following high-profile corporate collapses that have called into question the quality of their work as both auditors and consultants for the UK’s largest companies.
Just keep up to date in Private Eye the shenanigans these four get up to. Borders on gross negligence/criminality I reckon.
https://www.ft.com/content/6c07f5d8-591b-11e8-bdb7...
The Big Four accountancy firms have drawn up contingency plans for a break up of their UK businesses, an option politicians and regulators are increasingly pushing to solve conflicts of interest embedded in the industry.
The pressure on the four firms that dominate the sector — KPMG, Deloitte, EY and PwC — to prepare for a forced break-up has increased following high-profile corporate collapses that have called into question the quality of their work as both auditors and consultants for the UK’s largest companies.
Just keep up to date in Private Eye the shenanigans these four get up to. Borders on gross negligence/criminality I reckon.
Welshbeef said:
crankedup said:
Thought this for some years, not just the building industry. One problem is the lack of deterrent for Boards to act with impunity and arrogance, seen several big name examples in recent times. The mess .left behind for others to clear up takes years and yet the perpetrators are allowed to waltz off into the sunset!
I’ve a feeling that they will have bonuses and pensions stripped from them - all the red room staff. However how far back do you go? When did the rot start? Do you go after a red room person who is retired years and years ago and turn them to state pension only and try to take their bonuses away?
That’s the issue - the focus is on the ones where the plates stop spinning.
Perhaps when we have a principle of punishment that follows the reward principles it may focus the minds of the errant or lay Directors. For that solid accountancy and auditing needs to be strongly applied. Simply Boards ignoring the obvious should be punished back to the early warnings being ignored.
Bailouts from failing Companies, as appears to be the case in Carillion accountant, should be punished if the work previously completed was clearly poor in regard to a Companies health.
If we maintain a principle of high rewar for success it must be right for the opposite to be applied?
robinessex said:
Big Four accountancy firms plan for forced break-up
https://www.ft.com/content/6c07f5d8-591b-11e8-bdb7...
The Big Four accountancy firms have drawn up contingency plans for a break up of their UK businesses, an option politicians and regulators are increasingly pushing to solve conflicts of interest embedded in the industry.
The pressure on the four firms that dominate the sector — KPMG, Deloitte, EY and PwC — to prepare for a forced break-up has increased following high-profile corporate collapses that have called into question the quality of their work as both auditors and consultants for the UK’s largest companies.
Just keep up to date in Private Eye the shenanigans these four get up to. Borders on gross negligence/criminality I reckon.
Massive red herring.https://www.ft.com/content/6c07f5d8-591b-11e8-bdb7...
The Big Four accountancy firms have drawn up contingency plans for a break up of their UK businesses, an option politicians and regulators are increasingly pushing to solve conflicts of interest embedded in the industry.
The pressure on the four firms that dominate the sector — KPMG, Deloitte, EY and PwC — to prepare for a forced break-up has increased following high-profile corporate collapses that have called into question the quality of their work as both auditors and consultants for the UK’s largest companies.
Just keep up to date in Private Eye the shenanigans these four get up to. Borders on gross negligence/criminality I reckon.
When an external audit contract is awarded, there is a massive pressure over the winner to sign the accounts on time and only a limited amount of visibility (hence scrutiny) over the working files and documents. At the same time, what is internally defined as an audit client, prevents the consulting team to do any work for as long as the audit contract is effective. At the end of the audit tenure, it usually takes over a year for the consulting team to start working with that client. In the process you have to build a network of useful connections, and usually these are not the ones that the Audit team developed, since scope and responsibilities are different.
Far from me defending or justifying them, but there's very little KPMG could have done in this instance to limit the damages, this situation is mostly the fault of the administrators and the government which pushed for the outsourcing of certain functions in pursuit for false economies and savings.
crankedup said:
Some have thier ‘bonus shares’ recinded for the period leading up to the collapse. Pensions remain intact for the most part.
Perhaps when we have a principle of punishment that follows the reward principles it may focus the minds of the errant or lay Directors. For that solid accountancy and auditing needs to be strongly applied. Simply Boards ignoring the obvious should be punished back to the early warnings being ignored.
Bailouts from failing Companies, as appears to be the case in Carillion accountant, should be punished if the work previously completed was clearly poor in regard to a Companies health.
If we maintain a principle of high rewar for success it must be right for the opposite to be applied?
But poor health can be turned around. Perhaps when we have a principle of punishment that follows the reward principles it may focus the minds of the errant or lay Directors. For that solid accountancy and auditing needs to be strongly applied. Simply Boards ignoring the obvious should be punished back to the early warnings being ignored.
Bailouts from failing Companies, as appears to be the case in Carillion accountant, should be punished if the work previously completed was clearly poor in regard to a Companies health.
If we maintain a principle of high rewar for success it must be right for the opposite to be applied?
Say you were a director of a company and a few things had gone wrong causing some financial pain to the company. You retire but the company carries on and say a decade later it folds. Should you be sued/ stripped of all pensions and bonuses as you laid the foundation or is it only for those who were not able to turn around a sinking ship that should get hammered?
It’s an exceptionally difficult thing to put into practice.
Unless a decision was minuted as fraudulent and they then put that into action. What if the skill set of the individual and the support team isn’t good enough and that causes some bad decisions / wrong but not illegal decisions to be made?
What about an employee who does get a bonus say he/she leaves the company but then a decade later the company comes back to that employee as they did something wrong and that caused the loss of th contract should they have salary and bonus and pensions stripped?
Or is it only positions above a certain grade who get it? Is it only those with genuine Director in their titles and board members who are on the hook?
It’s interesting - also shouldn’t the share holders also be to blame too in some way?
crankedup said:
Some of the failings prompting the insolvency may be common within the sector, however it is the sheer scale of the Company that has caused the devastation with thousands of workers and goodness knows how many SME left ‘out of pocket’, latest example to the tune of 200k.
Companies left to grow to big seem to be a growing problem, no pun intended.
Quite the contrary Cranked....... most of the UK contractors are too small. They are totally unable to absorb the losses on a single or a few projects. The big boys in the construction contracting sector need to be way bigger than Carillion, to be able to survive & absorb the losses on projects that will be inevitable at some pointCompanies left to grow to big seem to be a growing problem, no pun intended.
I do feel sorry for auditors of large companies. They have deadlines to meet, limited resources and shareholders chomping at the bit for signed off accounts.
The firm I currently work for is currently unpicking the mess from our previous auditor missing a huge issue of over-reporting profits, it wasn't until a whistleblower from inside our own accounting team stepped up that anything was done about it, so there are instances where these companies (that in our case also provided professional services) definitely could do more. I guess it depends what you expect to be audited - are you just looking for legal accounting compliance or a health check on the business?
The firm I currently work for is currently unpicking the mess from our previous auditor missing a huge issue of over-reporting profits, it wasn't until a whistleblower from inside our own accounting team stepped up that anything was done about it, so there are instances where these companies (that in our case also provided professional services) definitely could do more. I guess it depends what you expect to be audited - are you just looking for legal accounting compliance or a health check on the business?
The other thing is the actual £ to audit is really low - it should be higher.
Also there are 6,000 auditor firms registered in the U.K.
grant Thornton number 5 if you like bid for 40 jobs on the FTSE top 100 they won 2, as such are now no bidding these companies as the cost vs 2/40 reward doesn’t work.
Fix that and it makes a difference.
Also there are 6,000 auditor firms registered in the U.K.
grant Thornton number 5 if you like bid for 40 jobs on the FTSE top 100 they won 2, as such are now no bidding these companies as the cost vs 2/40 reward doesn’t work.
Fix that and it makes a difference.
robinessex said:
Big Four accountancy firms plan for forced break-up
https://www.ft.com/content/6c07f5d8-591b-11e8-bdb7...
The Big Four accountancy firms have drawn up contingency plans for a break up of their UK businesses, an option politicians and regulators are increasingly pushing to solve conflicts of interest embedded in the industry.
The pressure on the four firms that dominate the sector — KPMG, Deloitte, EY and PwC — to prepare for a forced break-up has increased following high-profile corporate collapses that have called into question the quality of their work as both auditors and consultants for the UK’s largest companies.
Just keep up to date in Private Eye the shenanigans these four get up to. Borders on gross negligence/criminality I reckon.
These plans are made as part of annual FRC returns. They are not new. https://www.ft.com/content/6c07f5d8-591b-11e8-bdb7...
The Big Four accountancy firms have drawn up contingency plans for a break up of their UK businesses, an option politicians and regulators are increasingly pushing to solve conflicts of interest embedded in the industry.
The pressure on the four firms that dominate the sector — KPMG, Deloitte, EY and PwC — to prepare for a forced break-up has increased following high-profile corporate collapses that have called into question the quality of their work as both auditors and consultants for the UK’s largest companies.
Just keep up to date in Private Eye the shenanigans these four get up to. Borders on gross negligence/criminality I reckon.
KarlMac said:
I do feel sorry for auditors of large companies. They have deadlines to meet, limited resources and shareholders chomping at the bit for signed off accounts.
The firm I currently work for is currently unpicking the mess from our previous auditor missing a huge issue of over-reporting profits, it wasn't until a whistleblower from inside our own accounting team stepped up that anything was done about it, so there are instances where these companies (that in our case also provided professional services) definitely could do more. I guess it depends what you expect to be audited - are you just looking for legal accounting compliance or a health check on the business?
TF it's not only large firms.The firm I currently work for is currently unpicking the mess from our previous auditor missing a huge issue of over-reporting profits, it wasn't until a whistleblower from inside our own accounting team stepped up that anything was done about it, so there are instances where these companies (that in our case also provided professional services) definitely could do more. I guess it depends what you expect to be audited - are you just looking for legal accounting compliance or a health check on the business?
Our old (now retired) management accountant - our closest and most frequent contact with our accountants - uncovered two cases of internal fraud. One of which was in a firm taken over by one of their clients. In one case, I forget now which, the person involved in the fraud then committed suicide. He said he never wanted to find another fraud again, but we were always reassured by his thoroughness all the same!
The fact is, prior to his involvement, both these individuals had been embezzling funds, without detection by either internal management, or accountants, for some time. It happens.
GT03ROB said:
crankedup said:
Some of the failings prompting the insolvency may be common within the sector, however it is the sheer scale of the Company that has caused the devastation with thousands of workers and goodness knows how many SME left ‘out of pocket’, latest example to the tune of 200k.
Companies left to grow to big seem to be a growing problem, no pun intended.
Quite the contrary Cranked....... most of the UK contractors are too small. They are totally unable to absorb the losses on a single or a few projects. The big boys in the construction contracting sector need to be way bigger than Carillion, to be able to survive & absorb the losses on projects that will be inevitable at some pointCompanies left to grow to big seem to be a growing problem, no pun intended.
My point was that the small man is beholding to the big boys, we know Carillion was treating its subbies very badly regards delaying payments for work completed. Those issues should be outlawed years back.
Alpinestars said:
robinessex said:
Big Four accountancy firms plan for forced break-up
https://www.ft.com/content/6c07f5d8-591b-11e8-bdb7...
The Big Four accountancy firms have drawn up contingency plans for a break up of their UK businesses, an option politicians and regulators are increasingly pushing to solve conflicts of interest embedded in the industry.
The pressure on the four firms that dominate the sector — KPMG, Deloitte, EY and PwC — to prepare for a forced break-up has increased following high-profile corporate collapses that have called into question the quality of their work as both auditors and consultants for the UK’s largest companies.
Just keep up to date in Private Eye the shenanigans these four get up to. Borders on gross negligence/criminality I reckon.
These plans are made as part of annual FRC returns. They are not new. https://www.ft.com/content/6c07f5d8-591b-11e8-bdb7...
The Big Four accountancy firms have drawn up contingency plans for a break up of their UK businesses, an option politicians and regulators are increasingly pushing to solve conflicts of interest embedded in the industry.
The pressure on the four firms that dominate the sector — KPMG, Deloitte, EY and PwC — to prepare for a forced break-up has increased following high-profile corporate collapses that have called into question the quality of their work as both auditors and consultants for the UK’s largest companies.
Just keep up to date in Private Eye the shenanigans these four get up to. Borders on gross negligence/criminality I reckon.
We have credit limits for our customers and we run credit checks every 3 or 6 months - but some contracts far more frequently and if needed reduce business / WIP to eliminate any potential exposure.
It’s hard to turn down trade but I’d rather that issue than have to go down bad debt/write off
It’s hard to turn down trade but I’d rather that issue than have to go down bad debt/write off
Welshbeef said:
We have credit limits for our customers and we run credit checks every 3 or 6 months - but some contracts far more frequently and if needed reduce business / WIP to eliminate any potential exposure.
It’s hard to turn down trade but I’d rather that issue than have to go down bad debt/write off
Same here. Very deep credit checks after a very close shave a few years ago. Luckily the client had not released our monies to the PC when, after a heads up conversation with the departing contracts manager, we discovered a phoenix director of some magnitude. The client paid us direct but at the time a £45k hit would have caused us a good amount of pain. The Carillion board need to go to jail as far as I am concerned. The ran a Ponzi scheme of some magnitude!It’s hard to turn down trade but I’d rather that issue than have to go down bad debt/write off
KarlMac said:
I do feel sorry for auditors of large companies. They have deadlines to meet, limited resources and shareholders chomping at the bit for signed off accounts.
The firm I currently work for is currently unpicking the mess from our previous auditor missing a huge issue of over-reporting profits, it wasn't until a whistleblower from inside our own accounting team stepped up that anything was done about it, so there are instances where these companies (that in our case also provided professional services) definitely could do more. I guess it depends what you expect to be audited - are you just looking for legal accounting compliance or a health check on the business?
I never feel sorry for auditors. If they haven't got the resources to do their job, whose fault is that?The firm I currently work for is currently unpicking the mess from our previous auditor missing a huge issue of over-reporting profits, it wasn't until a whistleblower from inside our own accounting team stepped up that anything was done about it, so there are instances where these companies (that in our case also provided professional services) definitely could do more. I guess it depends what you expect to be audited - are you just looking for legal accounting compliance or a health check on the business?
Eric Mc said:
I never feel sorry for auditors. If they haven't got the resources to do their job, whose fault is that?
Don’t take on the job. They bid for the work - they know the scale of the client skill up to deliver or outsource it to Grant Thornton or another who has capacity.
If you cannot deliver the product you are selling then walk away. These are long term auditor deals so it’s no surprise and the amount of people Kaplan amongst others are churning out every year it shouldn’t be difficult.
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