WHAT IMPACTS HAVE CASES SUCH AS TED BAKER HAD FOR THE UK AUDITING PROFESSION SINCE 2018 2019

KPMG has particularly been investigated in regard to the breaches that the company did of the professional ethics at the time of providing the services to Ted Baker in particular. The major investigation was done by the Financial Reporting Council of the United Kingdom in particular. It is the disciplinary watchdog of the accounting industry of Britain in particular (Bhaskar. and Flower., 2019). In the year 2012, the solicitors that were acting for the company Ted Baker within a civil claim that had particularly been brought or received against the insurers that contacted the forensic department of KPMG. This was primarily done for the purpose of providing the expert evidence in relation to the quantum of the claim of Ted Baker in particular.

The accounting and disciplinary watchdog of the UK has fined an amount of £3 million after the company KPMG admitted that the company in particular did misconduct within the audits with the company Ted Baker in the years 2013 as well as 2014. This is basically the time that is considered one of the many times when KPMG did this for the company Ted Baker. The FRC also stated that there was a major risk that was further reviewed by an audit team, and there was an unacceptable threat of self-review in particular. The threat of self-review that was eventuated in particular was related to two major aspects, which are the disclosure regarding the loss of profit claim in particular and the ways through which the management of the company Ted Baker elected for the purpose of accounting for the illegal costs of the company in particular.

KPMG has also received a lot of criticism from the people of the market for the purpose and the ways in which it handled the accounts of the company Ted Baker, but the penalty was further reduced to £2.1 million as the company settled. The company KPMG declared that one of its well-known partners was also involved in the same, and therefore the partner of the company, Michael Barradell, was fined £80,000 for the purpose of his admission in the misconduct. His fine was also reduced after the settlement in particular (YALCİN). The FRC has further imposed sanctions against the company KPMG as well as the senior statutory auditor due to the audits of the company Ted Baker. The company along with the partner of the company have been particularly fined as well as reprimanded by the FRC due to the misconduct within the financial statements of Ted Baker in particular.

The occurrence of the misconduct was during the financial years from January 2013 as well as January 2014 in particular. The misconduct mainly arose because the company KPMG provided a set of expert witness services to the company Ted Baker within the Commercial Court claim in particular (Council., 2019). The major misconduct in particular was regarding the auditing and the financial statements of Ted Baker; hence, Ted Baker was also penalized. The actions led to the breach of the ethical standards and further led to the loss of the independence of the company's audits. There was also a threat that is significant and is regarding the self-interest because the particular fees for the purpose of the engagement of the expert exceeded the amount of the audit fees. Which Barradell and KPMG were unable to consider?

The direct admission from the side of KPMG as well as Barradell showed that they fell significantly short regarding the standards as of the member and the member firm and actually failed to act with respect to the fundamental principles of the ICAEW. The principles that they did not give relevance to were of due care and professional competence in particular.

The major meaning that this whole situation has on the industry in particular, the company KPMG, was particularly singled out as of the unacceptable decline within the quality of the auditing of the company; this also served as the illustration of the CMA concerns regarding the Big Four that were dominating the overall accounting industry. Which further led to strengthening the overall case for the second and smaller firm or organization, which was brought in for the FTSE 350 members in particular (Sikka. et al., 2018). And also in illustration of the clash of the interests, which was potential and was among the different departments of one firm in particular. Britain has been a good place for the modern audit in particular. But the scandals that have occurred in the period of a decade itself have brought the British auditors under situations or conditions of intense scrutiny in particular.

One major impact on the overall audit industry and the accounting profession is from the competition and markets authority of the UK in particular. They have had an interim report that basically proposed that the audits of the biggest companies of the United Kingdom that are listed on FTSE 350 should particularly be split among at least two organizations or firms in particular. From which one of the firms should be out of the big four. This is primarily because the trust and reliability of the public, the companies, and the government of the UK have declined towards the big four after the major scandals that particularly took place within the duration of a decade in particular.

Also, the levels of trust towards the FRC have declined; the insurance group Legal & General Manager stated that the FRC was particularly built on the foundations that are weak. This is the major reason due to which such scandals have been occurring. And the finances are one of the most important as well as necessary aspects of society, and if someone is not eligible to handle it in the most appropriate way, then the trust and the reliability of the people will reduce for sure.

Also, a review of the overall audit industry has been sponsored by the government so that the people are not investing their finances in a place that is not trustworthy. And if the government will not take major actions, the trust from the governmental bodies will also decline in particular. There is a major crisis of trust in the auditing profession within the UK due to these scandals in particular.

The FRC has particularly gotten a lot of criticism after the scandals that have occurred in the recent years in particular. This is mainly because of the failures that have occurred in the FRC regarding the audits that have been conducted by the Big Four in particular. These mistakes are particularly observed by major countries in the world as well. This has led to the lack of trust towards the audit of the United Kingdom, and they also have an urge to know how the country will gain the trust from other countries and also the companies within the UK and the stakeholders as well.

Trust as well as fairness is something that the accounting and auditing departments should essentially have in particular. But as of the scandals that have occurred and have caused a penalization of around millions of pounds from the side of the companies, access to the quality and the news that is truthful is questionable in particular.

CONCLUSION

This report gives a description regarding the company Ted Baker. Then the report discusses the repercussions and the investigations that took rise due to the services provided by KPMG to Ted Baker over the last decade. Assignment Help is also explored in this context. And lastly, the report discusses the impact that cases like these have on the UK auditing profession in particular. This is mainly for the years of 2018 as well as 2019 in particular, when the case was out and serious investigations took place.

REFERENCES

Books and Journals

Bhaskar, K., and Flower, J., 2019. Financial failures and scandals: From Enron to Carillion. Routledge.

Çalıyurt, K.T., 2021. Introduction Chapter: Why It Is Time to Talk About Fraud Quadrangle: Negative Pressure, Unethical Rationalization, Unsufficient Control-Auditing, and Moral Erosion. In Ethics and Sustainability in Accounting and Finance, Volume II (pp. 1-16). Springer, Singapore.

Council, F.R., 2019. Developments in audit 2019. London, UK: FRC.

Sikka, P. and et al., 2018. Reforming the auditing industry. Report commissioned by the Shadow Chancellor of the Exchequer, John McDonnell MP.

YALCİN, N., KPMG Vak’ası II. Muhasebe Enstitüsü Dergisi, (67), pp. 83-96.

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