Peter Meehan, the KPMG audit partner for Carillion told MPs: ‘No, I can’t see how that was a cause in itself at all.’

At other points in his evidence, Meehan said he ‘did not recognise’ some of the figures committee members quoted from position papers prepared by Carillion’s finance team in the run up to the company’s write down in July of last year and also its analysis of key contracts which were at risk.

‘All the contracts were complex in nature, and as such there were a wide range of judgments and estimates involved, and there’s a wide range of acceptable answers, and there is no right answer in terms of those judgments and estimates and contracts,’ Meehan said.

Michael Jones, partner with Deloitte, which acted as Carillion’s internal auditor, said the company subjected around 100 contracts, worth roughly half the value of outstanding contracts, to a peer review process. This involved company staff who were not involved directly on those contracts.

Deloitte then looked at about 50 contracts which had given rise to provisions in the accounts, and found that ‘in a number of cases the peer review team had taken a more pessimistic view of the contract performance than was presented in the numbers,’ Jones said.

MPs also pointed to evidence that had suggested the Qatar customer did not agree with Carillion’s view that they owed £200m, and thought Carillion owed them monies. Meehan responded by saying ‘the fact that one party thinks its £200m this way and the other thinks it’s the other way shows that there is a very broad range of what is acceptable in contract revenue accounting’.

There were further clashes between Meehan and MPs over the apparent difference between Carillion’s estimate that some £190m was owing to the company at its December 2016 year end and KPMG’s assessment of £70m. Meehan did not comment on the observation made by Frank Field, chair of the committee, that Carillion were ‘fantasists’ but said it was usual practice for a construction company to book a smaller amount for a potentially disputed claim on a contract.

There was a similar discussion over Carillion’s write down in July, which was originally put at £685m by the board and subsequently increased to £845m. Meehan told MPs the increase was partly due to the company’s decision to move to a more cautious approach to revenue recognition.

Challenged by the committee to explain why KPMG had not flagged up potential problems at the outsourcer, Michelle Hinchcliffe, KPMG head of audit, said: ‘Saying that the audit is a true and fair account is not the same as giving a clean bill of health, or that the company is not profitable and contracts are below market prices. The role of the auditor is to check the figures and make sure they are in accordance with accounting standards. It is not a guarantee that a company can continue or that management is making effective decisions.’

Hinchliffe was pressed repeatedly about findings from the Financial Reporting Council’s annual quality reviews, which MPs claimed suggested KPMG needed to tighten up its approach to revenue recognition and also indicated insufficient testing of the reliability of cashflows and impairment assessments of goodwill. She told the committee that the firm was in the process of reviewing its procedures and making enhancements. KPMG has now mandated all teams to implement a revised approach to testing goodwill.

At the beginning of the session Lesley Titcomb, chief executive of The Pensions Regulator (TPR) came under heavy criticism from MPs over her apparent inability to recall key facts, including the number of pension schemes marked as having exceptionally long periods required to make up deficits.

Field told TPR representatives Carillion had ‘promised you candy floss in the future’ and should have been challenged more vigorously about plans to repair the company’s pension scheme deficit, rather than ‘shovelling’ money into paying dividends.

Report by Pat Sweet