U.K. luxury fashion designer Ted Baker Plc admitted to overstating its stock levels in another blow to auditor KPMG LLP.
The retailer said in a statement Dec. 2 that it had overstated inventory by an estimated 20 million to 25 million pounds ($26 million-$32 million). The news increases scrutiny of KPMG, which was slammed in 2018 for an “unacceptable deterioration” in audit quality by the FInancial Reporting Council, U.K.'s accounting watchdog.
- Ted Baker said it has hired London-City lawyers Freshfields Bruckhaus Deringer LLP “and will be appointing independent accountants to undertake a comprehensive review of this issue.”
- KPMG signed off on inventory worth 225 million pounds for fiscal year 2019, but warned in its auditors’ report that this was a “subjective estimate.” It didn’t issue a qualified opinion to challenge the inventory estimate.
- A May 2018 parliamentary report on the collapse of Carillion Plc said KPMG was “complicit” in the company’s questionable accounting practices.