The collapse of one of the U.K.’s biggest construction firms and major government contractors has highlighted how important it is for assurance functions—including compliance—to ensure that boards have the necessary management information to make key strategic decisions. It also shows that compliance, internal audit, and risk management departments need to provide greater challenges, as well as a critical eye, to check that the strategy and business plan the board is pursuing continues to make sense, especially if market conditions change.
The fallout from Carillion’s collapse is likely to be felt for some time. In March, the U.K.’s corporate governance regulator, the Financial Reporting Council (FRC), began an investigation into the conduct of the company’s former group finance directors Richard Adam and Zafar Khan, and at the end of January—just two weeks after the company went bust—it announced that it was investigating KPMG’s audit work.
