Financial Accounting News

Designer Ted Baker’s Accounting Blunder Raises Pressure on KPMG

Dec. 2, 2019, 3:54 PM

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.

To contact the reporter on this story: Michael Kapoor in London at correspondents@bloomberglaw.com
To contact the editors responsible for this story: Jeff Harrington at jharrington@bloombergtax.com; Kathy Larsen at klarsen@bloombergtax.com

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