Calls for watchdog to review KPMG’s £58m Ted Baker accounting scandal

Calls for watchdog to review KPMG’s £53m Ted Baker accounting scandal
The FRC has been asked to step in after Ted Baker overstatement of stock nearly triples.
// Accounting experts call for watchdog to review Ted Baker’s overstatement of stock
// Figure rose from £25 million to £58 million after Deloitte reviewed KPMG’s accounting
// Calls come as Financial Reporting Council announced raft of changes at the watchdog

Experts have called for the Financial Reporting Council (FRC) to investigate KPMG after it overestimated Ted Baker’s stock by £58 million.

The figure originally stood at £25 million, but in January the figure rose to £58 million following an independent review by accountants at Deloitte.

READ MORE: Ted Baker’s accounting overstatement triples to £58m

Sheffield University accounting professor Prep Sikka, who advised MPs on audit reform, has been cited by the Daily Mail as calling for further investigations by the FRC.

House of Commons business committee chairman Rachel Reeves has also implored the FRC to look into the matter.

“Serious questions need to be answered about how a huge hole in Ted Baker’s balance sheet emerged just months after the auditors signed off the accounts,” said Reeves.

“This is not simply a small error. KPMG had a duty to verify and query the inventory,” Sikka added.

The FRC finds itself under intense scrutiny  after a government-backed review by Sir John Kingman in 2018, analysing its powers and effectiveness.

Last week the regulator announced it would expand its enforcement powers and speed up its investigation of auditors in the wake of a spate of corporate accounting scandals.

The FRC said it will increase its voluntary levy on companies, through which it is funded, by £5.5 million to £47.2 million, recruit more than 100 employees and improve its decision-making process on carrying out investigations.

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