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”.

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