Fraud and the Big Four: What we should expect from auditors?
The auditing profession has found itself under closer scrutiny than ever this year.
09 December 2019
It was one of the toe-curling moments of a turbulent year in business. When the chief executive of one of Britain’s biggest accountants told MPs it was not the auditors' job to look out for fraud, outsiders could hardly believe what they were reading.
David Dunckley’s evidence to a parliamentary committee came during questions about the collapse of Patisserie Valerie after a £40 million hole was found in its accounts. It was one of a string of company collapses in which auditing has been called into question this year.
Grant Thornton is being probed over its scrutiny of Interserve’s books before the outsourcing giant went into administration in March. KPMG was the auditor of East Kilbride firm Goals Soccer Centres at the time of the alleged VAT fraud which led to the company’s collapse. Grant Thornton also resigned as Sports Direct’s auditor after it emerged that a £674 million tax was owed in Belgium.
This month, KPMG was in the spotlight again after its audit client Halfords was forced to write down its inventory by £12 million. It was also the auditor for Ted Baker, which this week admitted it may have overstated its stock levels by up to £25 million. KPMG had already been given a ticking off and fined £2.1 million for its auditing of the fashion brand. The lead auditor at Halfords was Peter Meehan, the same KPMG partner responsible for scrutinising outsourcer Carillon, which collapsed last year.
Article originally published on Insider.co.uk