The auditors of Carillion will be quizzed by MPs on Thursday over its role in the collapse of the construction giant.

Two select committees will also question Carillion’s internal auditors Deloitte and the Pensions Regulator as part of a joint inquiry into the crisis.

The Work and Pensions, and Business Committees said they had a “growing pile of evidence” that those involved with Carillion, including investors and hedge funds, saw warnings of its demise.

In a statement ahead of Thursday’s hearing, the committees said: “So why didn’t the auditors? How did KPMG sign off accounts that had £845 million written off their value four months later?”

Rachel Reeves, who chairs the Business Committee, said: “Investors spotted that Carillion was heading for disaster and fled. The company had unsustainably high levels of debt, weak cash-generation and was saddled with a widening pensions deficit.

“Carillion’s annual reports were worthless as a guide to the true financial health of the company.

“The fact that it was impossible to get a true sense of the assets, liabilities and cash generation of the business raises serious questions about Carillion’s corporate governance.

“KMPG will have to explain why they signed off on accounts which appear to have borne so little relation to reality.”

More than 1,000 former Carillion workers have lost their jobs since the company went into liquidation last month.

KPMG is already facing an investigation by the Financial Reporting Council.

The committees published the first of the responses to their queries about the litany of organisations ascribed some role or responsibility in the events leading to the demise of Carillion.

The committees said that in evidence in Parliament on February 6, former chief executive Richard Howson was asked about the “now infamous” £845 million contract write-down in July 2017, which brought the crisis at the company into public view.

Mr Howson “fell back” on the discovery of cracked beams in the construction of the Royal Liverpool Hospital, which he said added over £20 million to the cost of completion.

The committees published a response from the contractor building the hospital, the Hospital Company, which indicates that the cracks were discovered nine months before the July 2017 write down, in
November 2016, when work in that part of the hospital was halted.

The defects and the resulting partial halt in work were reported in local papers in December 2016.

The letter says the costs of the defects are currently being borne by the beam designers while liability is established. All work on the hospital is now on hold, following Carillion’s collapse.

KPMG also audited the Hospital Company accounts.

Frank Field, chairman of the Work and Pensions Committee, said: “These famous beams are becoming an ever more perfect parable for the whole company: the cracks were visible long before the directors or auditors admit, and while they were dutifully added to the litany of factors and organisations to blame for Carillion’s spectacular demise  – anyone and anything but the people running it – they were only ever holding up one part of one of Carillion’s thousands of projects.”

Unite assistant general secretary Gail Cartmail said: “Thousands of Carillion workers remain in limbo and while there have been plenty of warm words from government ministers that public sector contracts will be protected, there are still no assurances that the terms and conditions of the workers will be protected.

“MPs from all parties called on the government to introduce voluntary TUPE procedures to ensure that workers who were entirely blameless in Carillion’s collapse have their pay and conditions protected.

“It is to the government’s discredit that they have refused to introduce this minor and simple measure which would provide some reassurance to these workers.”