KPMG's Connaught appointment "meets industry guidelines"

KPMG has defended its role as administrator of building services firm Connaught and said its appointment was in line with industry guidelines.

The Big Four firm was the Connaught auditor immediately before PwC took over in 2005.

A KPMG spokesman said: “Our appointment is fully in accordance with industry guidelines, which recommend a cooling-off period of three years. Our last audit of Connaught was five years ago.”

In July, Connaught announced to the markets that an internal investigation was underway into its accounting policies, in particular those concerning so-called “mobilisation costs”.

“The chairman has initiated an independent review of the current accounting policy for mobilisation costs to ensure that, in light of the more contractual and tightened economic environment, this policy remains appropriate in its current form,“ the company said in its July statement.

These transactions involve pre-contract costs associated with Connaught’s social housing programs. Analysts at the time believed “a material negative restatement of profits will be proved necessary”.