Essay Topic: Outline and discuss the key audit or accounting issues arising from the allocated case study of " Carillon (UK)" and detail why each issue is important. You should reference at least five...

Introduction
Carillion plc was a British multinational entity which is engaged in the construction and facilities management services and it is headquartered in Wolverhampton in the UK before its liquidation. This entity was created in July 1999 from the demerger of Tarmac. This was the second-largest construction entity in the UK and was listed on the London stock exchange. The entity collapsed in the year 2018 due to the £ 2.6 billion pension liability and around £2 billion debt to the suppliers and sub-contractors. The financial statement of the entity in the year 2016 shows that the entity has paid the best dividend of £79 million and declared bonuses to the top management of the entity. But in July 2017 just four months after the annual report of the year 2016 the profit of the entity has shown a warning with a decrease in the value of contracts by £ 845 million. This amount was increased in the year September 2017 to £1045 million. Finally, in the year 2018, the entity was liquidated with a liability of about £7 billion and out of which £29 million was cash. This was due to accounting fraud committed by the entity through manipulations in the financial information such as a change in the accounting estimates, and a change in the number of reserves of the entity. The management has used illegal methods for showing the strong financial position of the entity. It was found that there was manipulation of the financial information in the profit and loss account and the balance sheet of the entity. The entity was liquidated in the year 2018 which has cost a lot to the shareholders of the entity and various top management employees were held responsible for the accounting fraud in the entity (Federico Mor, et al. 2018).
Accounting issues arising from the Carillion plc in the UK and the importance of each accounting issue
The top management of the entity was involved in the continuous illegal manipulations in achieving to meet the market demand and showing financial statements more attractive. This was performed by using the basic method of fraud such as a change in the accounting estimates and others for improving the picture of the entity. The financial statement of the entity was based on various estimates and thus the top management can easily change such estimates. Thus they can easily overstate the net worth and net income of the entity. The entity has exploited the finance scheme of the supply chain in which it consumed £500 million. The entity has used aggressive strategies for window-dressing the financial statement for improving the cash flow conversion ratio, strengthen the cash position and decrease the debt of the entity, and increasing the cash flow generation from the operations of the entity. The entity has used the cash conversion ratio as the key performance indicator in the past three years and the factor for determining the remuneration of...