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The UK’s accounting watchdog is investigating accountancy firm MHA for its audit of failed construction group ISG, in a setback for the firm after it announced its intention to float on London’s junior stock market.
The Financial Reporting Council said on Tuesday it had begun an investigation into the firm’s audit of ISG for the year ending December 2022, after the company collapsed last year, putting at least 27 much-needed prison construction projects at risk.
The investigation into MHA’s audit quality will weigh on the firm’s hopes of a £125mn public listing. On Monday the top-20 accountancy firm said it was intending to float on Aim in the coming weeks.
MHA’s plan to raise capital through a public listing stands out in a sector dominated by traditional partnerships, and comes as many other UK accountancy firms turn to private equity to drum up investment.
ISG’s failure was the most high-profile in the construction sector since government contractor Carillion went into administration in 2018, a collapse that accelerated attempts to tighten the rigour of audits in the UK.
MHA said: “MHA is committed to audit quality and we will be co-operating fully with the FRC as part of this investigation.”
