Carillion collapse / corporate governance and audit failure
Risk Mechanism
Weak governance, audit, accounting, and risk-monitoring controls obscured financial distress, contract exposure, supplier risk, and performance problems until Carillion collapsed.
Case Summary
Carillion, a major UK construction and facilities-management contractor, entered compulsory liquidation in 2018 after serious governance, accounting, audit, and risk-management failures. Its collapse disrupted public projects and supply chains and intensified scrutiny of procurement, audit, and corporate-governance controls for major contractors.
Risk Lesson
This case shows how weak audit challenge, poor board oversight, aggressive accounting, and delayed escalation can compromise evaluation and assurance processes. It highlights warning signs including optimistic reporting despite deteriorating performance, limited auditor challenge, opaque contract exposure, and failure to act on early warnings.
Reference
Oh, M. R. (2022). The collapse of Carillion: A case study in corporate governance. Birkbeck, University of London. Available from: https://www.researchgate.net/publication/388225388_The_Collapse_Of_Carillion_-_A_Case_Study_In_Corporate_Governance