Carillion Collapse Impacts Wider Audit Rules, Not Just KPMG

The International Accounting Standards Board is revisiting some rules that fed the collapse of Carillion Plc, which commentators said posed as many questions over international accounting standards as it did over the quality of KPMG’s audits.

“KPMG should have caught these things, but it will argue it was working within the rules,” Adam Leaver, a professor at Sheffield University Management School, said, referring to International Financial Reporting Standards.

“IFRS allows companies so much leeway over reporting,” he added, “it is almost an invitation to fraud.”

The U.K. court-appointed Official Receiver, acting for Carillion’s creditors, is ...