KPMG is facing a lawsuit worth up to £1.3 billion after being accused of failing in its duties over its role as auditor to Carillion the collapsed construction and outsourcing group.

In legal action by the Official Receiver, acting as liquidator on behalf of Carillion’s creditors, it is alleged that KPMG failed in its duties as auditor to spot misstatements in the outsourcing group’s accounts.

Carillion went into compulsory liquidation in January 2018, leaving creditors and shareholders out of pocket, threatening thousands of jobs and forcing the government to ensure the continuation of services, including the delivery of school meals, maintenance of hospitals and management of prisons.

The lawsuit against KPMG will claim damages of more than £1 billion, representing the sums Carillion paid out in dividends, advisory fees and losses incurred as the group continued to trade.

The claim focuses on the value of major long-term construction contracts, which were not properly accounted for in 2014, 2015 or 2016, resulting in misstatements in excess of £800 million within Carillion’s financial statements, it is claimed.

According to the Official Receiver, these include construction projects valued in the tens or hundreds of millions of pounds, including the Royal Liverpool Hospital, the Southmead Hospital redevelopment, the Aberdeen ring road, significant works at Gatwick and Stansted airports, and other major projects in the UK and overseas.

The claim will allege that KPMG failed to respond to multiple “red flags” which should have alerted it to a clear and obvious risk of misstatement, and that KPMG failed to maintain professional independence in conducting the audits, in breach of its professional and ethical obligations.

A spokesperson for the Official Receiver said: “Following extensive investigations looking into the causes of Carillion’s liquidation, the Official Receiver has submitted a claim to the High Court concerning KPMG’s role as auditor for the company’s accounts.

“The Official Receiver has taken this action in the interests of creditors who lost substantially in the liquidation.

“The decision is based on legal advice, which is that KPMG is answerable to Carillion’s creditors for losses that have been caused.”

A KPMG UK spokesperson said: “We believe this claim is without merit and we will robustly defend the case.

“Responsibility for the failure of Carillion lies solely with the company’s board and management, who set the strategy and ran the business.”