In August 2018, KPMG were fined £3m for acting as an expert witness for Ted Baker in a civil case whilst also providing the fashion company with auditing services. On both sides of the Atlantic, KPMG has received numerous financial penalties for its misdemeanours so it is, of course, no stranger to getting into trouble. However, news this week of financial problems within Ted Baker may cause KPMG further trouble, with this coming hot on the heels of its £5m fine for its performance regarding the auditing of the Bank of New York Mellon . This short post will review the recent developments at Ted Baker and ask whether it is to be considered that auditors will naturally transgress, and that financial penalties are simply to be considered ‘par for the course’. On Wednesday it was widely reported that Ted Baker had admitted to an accounting error – it has overstated the value of its stock by nearly £60m . Media reports confirm that, last month, the firm had hired Deloitte to invest...

We know here in Financial Regulation Matters that the audit industry is currently reeling from a number of high profile scandals regarding their involvement in corporate collapses. KPMG’s role in the collapse of both Carillion and BHS, alongside the involvement of their Big Four counterparts in the same, and in different scandals has led to calls to break up the ‘Big Four’ auditors . Whilst we have discussed this issue before , the Big Four (at least members of the Oligopoly) have now proposed a different solution, and have taken strides to enforce their will by taking action. However, there are a number of vital questions that stem from their decision. KPMG, announcing the move on Thursday, stated that they are to drop the availability of consultancy, or ‘non-audit’ services to clients they are simultaneously auditing , focusing on FTSE 350 clients specifically. Whilst a date for the policy change has not been confirmed, the Chair of the firm’s UK division stated that the move...

In today’s post, the focus will be on an industry that has been covered a lot here in Financial Regulation Matters . Recently, two auditors, in particular, having been making the headlines for all the wrong reasons, and as a result there have been calls for the industry to be ‘broken up’. However, how realistic is that call? There is a potential issue within society whereby calls are made that have no substance nor any understanding of the dynamics at play, so in this post we will look at the industry in closer detail to see just how realistic that large-scale call actually is. In the wake of the Enron Scandal and the collapse of Arthur Andersen, in addition to a massive reputational breakdown of the wider audit industry, the term ‘ too few to fail ’ was put forward as a suggestion for why the industry could simply carry on with their business once the news cycle has turned elsewhere. In the last year, these suggestions have been repeated , with there being an increased focus on...

South Africa is currently still reeling from the ‘ Gupta scandal ’, but in recent news one of the leading global auditors has come under intense fire for a number of aspects, including its links to the Gupta family. In this short post, we will review the recent news and examine the future for the auditor in the country in the wake of incredible action by the South African government. On Tuesday, it was announced that South Africa has banned KPMG from auditing public companies within the country. The move comes on the back of a number of scandals involving the auditor, including its ties to the Gupta family and also the recent collapse of VBS, a South African bank that despite being given a clean bill of health by the auditor collapsed a short time later. It has been stated by KPMG that senior officials within the South African arm of the company have left the company before they could face disciplinary action for failing to declare a financial interest in the bank . Although KP...

Today’s post reacts to the news that broke this evening concerning the massive accountancy (and advisory) firm KPMG’s withdrawal from the inquiry into the Grenfell Tower fire that occurred last June. Whilst this post will not discuss the Grenfell Tower disaster in any great detail – mostly because it is an extremely emotive subject but also because the Inquiry still has some way to go before concluding – it is worthwhile looking at two specific instances: the most important is to look at why KPMG today released a statement that it had ‘ mutually agreed with the inquiry that we will step down from our role with immediate effect ’, but it is also worth asking why KPMG was considered an appropriate source of advice in the first place – does the firm’s track record, particularly in the modern era, reveal for us the processes underpinning this most important of inquiries? KPMG is one constituent part of the so-called ‘Big Four’ – the oligopolistic partners within the accounting indus...