• Our booking engine at tickets.railforums.co.uk (powered by TrainSplit) helps support the running of the forum with every ticket purchase! Find out more and ask any questions/give us feedback in this thread!

Carillion in Liquidation

Status
Not open for further replies.

Xenophon PCDGS

Veteran Member
Joined
17 Apr 2011
Messages
32,270
Location
A semi-rural part of north-west England
HS2 C2 & C3
Midland Main line Improvement Electrification
Midland Main line Improvement Trackwork

These are the only rail contracts in the list of the largest 17 as listed by Construction News. Other contracts relate to buildings and roads

I am aware that this being a rail-oriented website that perceived rail contracts do loom large in the minds of some of the contributors to this thread, but there are other 14 contracts that are non-rail related in this schedule, some of which have received extensive media coverage.
 
Sponsor Post - registered members do not see these adverts; click here to register, or click here to log in
R

RailUK Forums

MarlowDonkey

Member
Joined
4 Apr 2013
Messages
1,094
In which case, I’ll defer to your expertise and leave it to you to point out the ways in which Carillion’s published 2017 accounts, as crawled over and agreed by their auditors KPMG (who don’t exactly come cheap given their big shiny office in Canary Wharf), were in some way incorrect/fraudulent... or pointed to impending collapse?

2016 Accounts

http://annualreport2016.carillionplc.com/downloads/Carillion_Financial_statements.pdf

"Intangible assets" £ 1669 million. That's what exactly?

"Goodwill" at £ 1544 million. That became worthless in a matter of months.
 

Bromley boy

Established Member
Joined
18 Jun 2015
Messages
4,611
Well that’s pretty embarrassing!

You clearly consider yourself qualified to comment on their financial statements.

As I asked before, are you a qualified accountant?

If so, can you now explain what that comparison of intangible assets v goodwill means and your qualifications for said explanation?!
 

MarlowDonkey

Member
Joined
4 Apr 2013
Messages
1,094
As I asked before, are you a qualified accountant?

No I'm a qualified actuary.

Accountants barely needed an O level in Mathematics.

Goodwill is "funny money". Most of the time it works, but a balance sheet that had cash, trade assets or receivables would be a good deal less vulnerable than one consisting of goodwill.

The projected payout to creditors is claimed to be 1p in the £ 1. That says that 99p of every £ 1 has gone missing, if it was ever there in the first place.
 

Bromley boy

Established Member
Joined
18 Jun 2015
Messages
4,611
No I'm a qualified actuary.

Accountants barely needed an O level in Mathematics.

Goodwill is "funny money". Most of the time it works, but a balance sheet that had cash, trade assets or receivables would be a good deal less vulnerable than one consisting of goodwill.

The projected payout to creditors is claimed to be 1p in the £ 1. That says that 99p of every £ 1 has gone missing, if it was ever there in the first place.

Given the quality of your postings on here, I seriously doubt you’re a qualified actuary. Even assuming you are, are you therefore alleging wrongdoing on the part of KPMG!?

If you are... in your supposed capacity as an actuary.. can you explain your comments above, and precisely how KPMG have erred
in their analysis of Carillion, as auditors?

Goodwill is funny money is it? I reckon that’s news to an accountant buddy of mine... I’ll be sure to ask him (he’s ex big 4
now at a bank... knows his onions.).

Bedtime for me. I look forward to seeing to your response tomorrow...
 
Last edited:

pemma

Veteran Member
Joined
23 Jan 2009
Messages
31,474
Location
Knutsford
No I'm a qualified actuary.

Accountants barely needed an O level in Mathematics.

I know a couple of accountants who had nothing more than a decent GCSE Maths grade before they undertook an AAT accredited course. It seems for some accountancy can be a back up option if you undertake a degree and but then can't get employment which relates to your degree.
 

AndrewE

Established Member
Joined
9 Nov 2015
Messages
5,075
can you explain... precisely how KPMG have erred
in their analysis of Carillion, as auditors?
There have been a succession of scandals where one of the "big 4" auditing companies has missed major problems in companies they have been paid to "audit." One that comes to mind is the Britannia Building Society, where the debts that should have been identified bankrupted the Coop bank soon after the sale went through.
If we had a suspicious mind we could imagine that the "intangible assets" are something fabricated or invented by the auditors to allow them to collect the huge fees without admitting the hole that is there in the finances.
 
Last edited:

DarloRich

Veteran Member
Joined
12 Oct 2010
Messages
29,182
Location
Fenny Stratford
I know a couple of accountants who had nothing more than a decent GCSE Maths grade before they undertook an AAT accredited course. It seems for some accountancy can be a back up option if you undertake a degree and but then can't get employment which relates to your degree.

A nice, snobby insult. I will tell my girlfriend who has worked very hard to gain her accountancy qualifications that they are worthless and she is a chancer because she doesn't have a degree. What a nimrod.
 

pemma

Veteran Member
Joined
23 Jan 2009
Messages
31,474
Location
Knutsford
A nice, snobby insult. I will tell my girlfriend who has worked very hard to gain her accountancy qualifications that they are worthless and she is a chancer because she doesn't have a degree. What a nimrod.

I simply a GCSE pass in Maths is enough to get you on to an AAT course and because of that some people become accountants after their first choice career plan doesn't work out. I didn't say the AAT qualifications are worthless or that accountancy isn't anyone's first choice of career. From your childish reply you obviously think your girlfriend is a genius who did some qualification that 99.9% of the population wouldn't be able to undertake - well your wrong, as well as being rude.
 

CarlSilva

Member
Joined
3 Jul 2016
Messages
144
Has anybody else seen this?

https://www.mirror.co.uk/news/politics/theresa-branded-total-hypocrite-trousering-11868280

Theresa May has been branded a “total hypocrite” for accepting £50,000 from a firm accused of making money off Carillion’s failure.
Naya Capital Management UK, which made the generous donation to the Tories a week before the general election, is one of a string of hedge funds that bet on the company’s share price falling.
Their value fell more than two-thirds in July, with Naya reportedly making £7.6million.
Carillion plunged into insolvency six months later.
 

DarloRich

Veteran Member
Joined
12 Oct 2010
Messages
29,182
Location
Fenny Stratford
I simply a GCSE pass in Maths is enough to get you on to an AAT course and because of that some people become accountants after their first choice career plan doesn't work out. I didn't say the AAT qualifications are worthless or that accountancy isn't anyone's first choice of career. From your childish reply you obviously think your girlfriend is a genius who did some qualification that 99.9% of the population wouldn't be able to undertake - well your wrong, as well as being rude.

oh dear, touched a nerve?

In any event it is the auditors with questions to answer - unless it can be proved that something criminal was going on with the finances in the background. Criminal mark you, not distasteful.
 

pemma

Veteran Member
Joined
23 Jan 2009
Messages
31,474
Location
Knutsford
One that comes to mind is the Britannia Building Society, where the debts that should have been identified bankrupted the Coop bank soon after the sale went through.

There was something very unusual about that sale. Normally members would be given a vote prior to a building society and a cash payout if the conversion happens* but all Britannia members got was a letter saying it would happen and that no payout would be made.

* Which is why many building societies made new members agree to donate any cash payouts to charity following what happened with Halifax.
 

DarloRich

Veteran Member
Joined
12 Oct 2010
Messages
29,182
Location
Fenny Stratford
You called me a snob and a 'nimrod' (whatever that's supposed to mean) for simply stating a fact which you don't like.

it is you who doesn't like the fact people can become accountants without a degree. You seem happy to demean people who haven't, perhaps like you, been to university, yet still been able to enter the professions. Which jobs may people without a degree undertake?

BTW - I have a maths GCSE and a degree and couldn't be an accountant. I have dyscalculia so yes, accountancy is witchcraft as far as I am concerned.
 

pemma

Veteran Member
Joined
23 Jan 2009
Messages
31,474
Location
Knutsford
it is you who doesn't like the fact people can become accountants without a degree. You seem happy to demean people who haven't, perhaps like you, been to university, yet still been able to enter the professions. Which jobs may people without a degree undertake?

What are you going on about? Another poster said it was possible to get on to accountancy qualifications with just O Level Maths. I agreed saying I know people who got on to them with just a pass in GCSE Maths and saying in some cases that allows an accountancy career to be plan B. You then went off on one and have started making up incorrect assumptions about what I think. Your question has no relevance to anything which has been said in previous posts or this thread on Carillion. You hate people who have degrees - we get that, you don't need to go off on one about it every time someone who you know has a degree says something you don't like, just like you do anything anyone dares to question the validity of the RMT's claims.
 

DavidGrain

Established Member
Joined
29 Dec 2017
Messages
1,233
As I understand it what has happened with staff working in the public sector is that the Official Receiver has asked the clients to put him in funds to pay ongoing wages. This will be regarded as an on account payment towards the contract payments due to the Official Receiver for the future services until the contracts can be transferred to new contractors when presumably these workers will he TUPEd to a new employer. The Official Receiver has appointed PWC as Special Manager to handle the actual work of winding the company up.

However whether this will work for self employed subbies I don't know.
 

DarloRich

Veteran Member
Joined
12 Oct 2010
Messages
29,182
Location
Fenny Stratford
What are you going on about? Another poster said it was possible to get on to accountancy qualifications with just O Level Maths. I agreed saying I know people who got on to them with just a pass in GCSE Maths and saying in some cases that allows an accountancy career to be plan B. You then went off on one and have started making up incorrect assumptions about what I think. Your question has no relevance to anything which has been said in previous posts or this thread on Carillion. You hate people who have degrees - we get that, you don't need to go off on one about it every time someone who you know has a degree says something you don't like, just like you do anything anyone dares to question the validity of the RMT's claims.

but I have a degree...........................................
 

pemma

Veteran Member
Joined
23 Jan 2009
Messages
31,474
Location
Knutsford
However whether this will work for self employed subbies I don't know.

Generally self employed don't have any protection. However, if their skills are needed and it would be difficult to find replacements for them then they may be able to come to some sort of arrangement.
 

DavidGrain

Established Member
Joined
29 Dec 2017
Messages
1,233
As there has been some comments about the educational level of accountants could I point out as an accountant who qualified in the 1960s, yes I did start with 5 GCE O Levels. However Accountancy is now regarded as a graduate entry profession. You are unlikely in the past 30 years, to have qualified as a Chartered Accountant or a Chartered Certified Accountant without a degree unless you have previously obtained the AAT qualification. For clarification AAT stands for Association of Accounting Technicians. The fact is that anyone can call themselves an accountant as this is not a protected title unlike say solicitor.

For information, I might have started straight from school but I now hold two university degrees (including a masters in finance) and three professional accounting qualifications.
 

snowball

Established Member
Joined
4 Mar 2013
Messages
7,674
Location
Leeds
There have been a succession of scandals where one of the "big 4" auditing companies has missed major problems in companies they have been paid to "audit." One that comes to mind is the Britannia Building Society, where the debts that should have been identified bankrupted the Coop bank soon after the sale went through.
If we had a suspicious mind we could imagine that the "intangible assets" are something fabricated or invented by the auditors to allow them to collect the huge fees without admitting the hole that is there in the finances.

As I understand it (not knowing much about this) there are structural problems with the big 4:

1) They are too big and there are too few of them

2) Any of them is free to simultaneously advise a company and audit its accounts

3) Governments have shown no interest in introducing rules to correct these problems.
 

Bromley boy

Established Member
Joined
18 Jun 2015
Messages
4,611
As I understand it (not knowing much about this) there are structural problems with the big 4:

1) They are too big and there are too few of them

2) Any of them is free to simultaneously advise a company and audit its accounts

3) Governments have shown no interest in introducing rules to correct these problems.

All very true.

Audit rotation rules have been introduced to combat these issues:

https://www.ft.com/content/8965060a-f808-11e5-96db-fc683b5e52db

At the heart of new European Union regulations is a requirement that companies put the job of auditing their accounts out to tender once every decade, and change their auditor at least every 20 years.

EDIT: and there have always been restrictions around the same firm both advising a company and then auditing the same advice.
 

DarloRich

Veteran Member
Joined
12 Oct 2010
Messages
29,182
Location
Fenny Stratford
As I understand it (not knowing much about this) there are structural problems with the big 4:

1) They are too big and there are too few of them

2) Any of them is free to simultaneously advise a company and audit its accounts

3) Governments have shown no interest in introducing rules to correct these problems.

All very true.

Audit rotation rules have been introduced to combat these issues:

https://www.ft.com/content/8965060a-f808-11e5-96db-fc683b5e52db

EDIT: and there have always been restrictions around the same firm both advising a company and then auditing the same advice.

there have been reams of paper in Private Eye about this very issue.
 

lejog

Established Member
Joined
27 Feb 2015
Messages
1,321
While there are valid concerns about the role of the audit firms, the fact is that it is impossible for accountants to spot or forecast problems at project based companies, when project staff, project managers or company directors can't spot the problem themselves.

Take an example of a (oversimplified, imaginary) project bringing in £1m per month over 5 years, with a 10% profit margin. At the end of month 1, there's a £100k profit sitting on the projects books, does the company declare that in their financial results? If they don't the £1m turnover will appear in the books with a zero profit, which will not please shareholders, the City or their bankers. If they do there's no buffer against future cost overruns, that £100k has gone never to return. And of course cost overruns only becoming apparent part way into a project is an all too familiar feature. Say later on there's a £5m overrun, not a disaster in itself - the project overall still breaks even, but if the earlier profit has been declared, it will mean booking a loss and perhaps issuing a profit warning.

The situation at Carillion was even worse as they were running at 3% profit margins and the government apparently generously gave them large up front stage payments as an incentive to lower the price. It is believed cost overruns on only 4 contracts bought them down.
 
Last edited:

LNW-GW Joint

Veteran Member
Joined
22 Feb 2011
Messages
19,555
Location
Mold, Clwyd
The situation at Carillion was even worse as they were running at 3% profit margins and the government apparently generously gave them large up front stage payments as an incentive to lower the price. It is believed cost overruns on only 4 contracts bought them down.

There's actually been no coverage at all on Carillion's overseas contracts (Middle East/Canada), which seem to be some of the worst-performing.
No doubt that's because no/few UK jobs/government contracts are at stake.
3% is also typically the margin of a rail franchise.
But that 3% gets the left angry for the contractor being a "fat cat", while to the accountants it's insufficient to meet the risks of staying afloat.
 

AndrewE

Established Member
Joined
9 Nov 2015
Messages
5,075
There's actually been no coverage at all on Carillion's overseas contracts (Middle East/Canada), which seem to be some of the worst-performing.
No doubt that's because no/few UK jobs/government contracts are at stake.
3% is also typically the margin of a rail franchise.
But that 3% gets the left angry for the contractor being a "fat cat", while to the accountants it's insufficient to meet the risks of staying afloat.
The 3% isn't the problem, it's how it is distributed. Like changing the rules to ensure the directors are well looked-after (and remuneration for their "work" and compensation for dismissal increases regardless of company performance) while ignoring the growing gap in the pension fund. The people who lose their pensions are of course the ones who create the money that the directors benefit from (I won't say parasitise...)
Even the spokesperson for the Institute of Directors was having difficulty defending them on the Radio 4 Today programme!
 

hwl

Established Member
Joined
5 Feb 2012
Messages
7,355
are you therefore alleging wrongdoing on the part of KPMG!?

If you are... in your supposed capacity as an actuary.. can you explain your comments above, and precisely how KPMG have erred
in their analysis of Carillion, as auditors?
The Financial Reporting Council announced on Monday that they have been examining KMPG's role as Carillions's Auditor "for some time"* already.

*In the words of the FRC chairman
 
Status
Not open for further replies.

Top