Carillion collapsed as a result of “recklessness, hubris and greed” among directors who put their own financial rewards ahead of all other concerns, according to an excoriating report into the firm’s demise that spreads the blame between board members, the government, accountants and regulators.

The company, which managed huge construction projects and provided government services ranging from school meals to prison maintenance and NHS cleaning, slumped into insolvency in January. More than 2,000 people have since been made redundant.

A damning 100-page report compiled by two select committees, published today, found that directors prioritised senior executive bonus payouts and dividends for shareholders even as the firm neared collapse, while treating pension payments as a “waste of money”.

Frank Field, who chairs the work and pension committee, said: “Same old story. Same old greed. A board of directors too busy stuffing their mouths with gold to show any concern for the welfare of their workforce or their pensioners.”

In a joint statement with business committee chair Rachel Reeves, the pair called for a complete overhaul of Britain’s corporate governance regime, saying the government had “lacked the decisiveness or bravery” to do so.

“Government urgently needs to come to parliament with radical reforms to our creaking system of corporate accountability,” Field said. “British industry is too important to be left in the hands of the likes of the shysters at the top of Carillion.”

The report warned that without corporate governance reforms, “Carillion could happen again, and soon”. The committees also accused the so-called big four accounting firms – PwC, KPMG, Deloitte and EY – of operating as a “cosy club”.

It claimed that KPMG had been “complicit” in signing off Carillion’s “increasingly fantastical figures” and internal auditor Deloitte had failed to identify “terminal failings” in risk management and financial controls, or “too readily ignored them”.

Reeves said the big four, who took £72m in fees in the decade leading up to Carillion’s failure, enjoyed a “parasitical” relationship with companies whose books they were meant to scrutinise.

“They are guilty of failing to tackle the crisis at Carillion, failing to insist the company paint a true picture of its crippling financial problems,” she said. The report recommends that the competition regulator now considers whether the big four accountancy firms should be forcibly broken up to increase competition.

Labour’s shadow business secretary, Rebecca Long-Bailey, and Liberal Democrat leader Vince Cable backed calls to break them up. Long-Bailey-said: “Millions racked up in debt, thousands of workers losing their jobs and pensions, and supply chain business at risk of collapse, because not only did the corporate auditors fail to hold Carillion’s misbehaving managers to account, but because the government looked on in ignorance at the same time, proceeding to award contract after contract to a firm which had issued numerous profit warnings.

“The breakup of the big four is only the first step. There needs to be a root-and-branch reform of the law in this area.”

Cable said it was time to “shatter this cosy club to create a more competitive, truly diverse market”.

A KPMG spokesperson said: “We believe we conducted our audit appropriately. However, it’s only right that following a corporate collapse of such size and significance, the necessary investigations are performed. Auditing large and complex businesses involves many judgments and we will continue to cooperate with the FRC’s ongoing investigation.

“We welcome any future review of our profession. If we consider how the profession has changed in the last decade […] it is clear there is a need for us to look closely at our business models.”

Deloitte said it was “disappointed with the conclusions of the committees in regard to our role as internal auditors” adding that it would take on board any lessons that could be learned from Carillion’s collapse.

Directors “used aggressive accounting policies to present a rosy picture to the markets", the MPs found. This resulted in the company admitting in July 2017 that £729m in revenue it had previously recognised (money the firm assumed would be coming in) would no longer be obtainable.

Here are some of the “accounting tricks” the report highlighted.

• Peer review This involves independent assessment of whether managers are correctly calculating the value of contracts. A 2016 review of Carillion’s contract to build the Royal Liverpool Hospital – which remains delayed indefinitely – reported it was making a loss. Carillion’s management overrode it and insisted on a healthy profit margin being assumed, leading to a difference of £53m in assumptions.

• Traded not certified Carillion was in the habit of saying it had banked revenue that actually it could not be certain of receiving from clients. In December 2016 it had recognised £294m of traded not certified revenue, more than 10% of construction revenue.

• Early payment facility This scheme allowed Carillion’s suppliers to claim what they were owed by the company from a bank, receiving the money quickly in exchange for a small discount on the bill. The report found Carillion relied upon the EPF to delay paying out money, using it as a “credit card” and failing to account for it as borrowing. “The only cash supporting its profits was that banked by denying money to suppliers,” the report said.

More than 2,000 of Carillion’s 19,500 UK staff have lost their jobs since its demise, although the Insolvency Service has found new employment for 11,618 people.

The company’s failure also saddled the government’s Pension Protection Fund with an £800m liability, its largest ever, while 30,000 suppliers and subcontractors are waiting in vain for £2bn in bills owed by the company. Creditors have been told they are likely to get back less than 1p for every £1 they are owed.

Taxpayers face at least £150m in clean-up costs, while multimillion-pound hospital projects intended to alleviate pressure on NHS services – the Royal Liverpool University Hospital and the Midland Metropolitan Hospital in Birmingham – are on hold indefinitely.

The report by the two committees placed most of the blame on the company’s “myopic” board, and says the government’s Insolvency Service should consider recommending that they be banned from holding directorships in future. The committees singled out Carillion’s finance chief, Richard Adam, chief executive Richard Howson and chairman Philip Green for particular criticism.

The trio presented themselves as “self-pitying victims of a maelstrom of coincidental and unforeseeable mishaps” including contracts in the Middle East that went sour. In fact, the committees found, the company’s problems were far more deep-rooted.

“Carillion’s rise and spectacular fall was a story of recklessness, hubris and greed,” the report said. “Its business model was a relentless dash for cash, driven by acquisitions, rising debt, expansion into new markets and exploitation of suppliers.

“It presented accounts that misrepresented the reality of the business, and increased its dividend every year, come what may,” the report said, adding that the company’s pension scheme was “treated with contempt”.

“Even as the company very publicly began to unravel, the board was concerned with increasing and protecting generous executive bonuses,” MPs on the committees added.

The report named Adam as the “architect of Carillion’s aggressive accounting policies”, which disguised the firm’s financial woes until July last year, when it admitted that £729m of revenues it had previously accounted for were unlikely to be obtainable.

MPs accused him of considering pension payments a “waste of money”, adding that pension trustees who sought increased contributions were “outgunned” by directors. They also criticised Adam’s sale of nearly £800,000 of shares shortly after retiring, a decision they described as “the actions of a man who knew where the company was heading”.

“Despite retiring over a year before Carillion went into insolvency, I am deeply saddened by the events that have since overtaken the company,” Adam said.

But he rejected the “unwarranted conclusions” of the committees regarding his role in the company, saying comments had been “misattributed to me”.

Green, a boardroom veteran and former adviser to David Cameron on corporate responsibility, said he and the board had “always strived to act in the interests of the company and all its stakeholders”. “Whilst much of the commentary in today’s report fails to understand and accurately reflect the true, more complex picture of events, the committee has highlighted lessons which can be learned by the board, the government and the wider industry.”

Howson declined to comment.

The government also came in for criticism for failing to address failures in corporate governance rules that allowed Carillion to become a “giant and unsustainable corporate timebomb”. The report called for an “ambitious and wide-ranging set of reforms” to overhaul the UK’s system of corporate accountability.

Theresa May promised to “change the way big business is governed” in 2016 during the first major speech of her campaign to lead the Conservative party and the country after Cameron’s resignation. She has since been accused of watering down planned reforms to corporate governance.

It emerged after Carillion’s collapse that the government continued to award large contracts to the firm even after it knew it was in financial trouble. The Guardian revealed earlier this year that the government knew in December last year of a plan that could have retrieved £364m from the company but did not push directors to adopt it.

A government spokesperson said: “Our priority has been the continued, safe running of public services and to minimise the impact of Carillion’s insolvency. The plans we put in place have ensured this. The government wants to see a strong and varied supplier base where companies of all sizes benefit from long-term and stable government contracts.

“That’s why we have recently announced a number of measures to support government suppliers – strengthening our commitment to prompt payment; protecting staff, businesses and small suppliers from irresponsible directors.

“We welcome the report from the joint select committee and will respond fully in due course.”

MPs also lashed out at regulators the Financial Reporting Council and the Pensions Regulator, branding them “chronically passive”. They said the two bodies were “too timid to make effective use of the powers they have” and should be given greater power, although they warned that this would require significant cultural change.

In the case of the Pensions Regulator, they said this might require new leadership. Chief executive Lesley Titcomb was criticised by MPs for an unconvincing showing during an evidence session with the two committees earlier this year.

The FRC said it was making “good progress” with an investigation into Carillion, one of the largest cases it has ever taken on.