“Under-fire accounting giant KPMG was on Monday slapped with a £3 million fine by the industry watchdog for a “breach of ethical standards” over its audit of fashion brand Ted Baker.
The Financial Reporting Council said the firm, which admitted it was in the wrong, should not have provided expert witness services to Ted Baker in a court case while it was also handling its books in 2013 and 2014.
“This was in breach of the ethical standards and led to the loss of KPMG’s independence in respect of the audits,” the FRC said. “In addition, there was a self-interest threat arising from the fact that the fees for the expert engagement significantly exceeded the audit fees.”
The firm’s fine was reduced to £2.1 million for settling the case early, although the auditor was also landed with a £112,000 bill for costs.
Its senior auditor, Michael Barradell was fined £80,000, cut to £46,800 after he settled.
KPMG said: “Where there are lessons to be learned, we will learn them.” It added that since last year it no longer offers any expert witness work for any company it audits and stressed that the actual scrutiny of Ted Baker’s books has not been called into question. …”
Source: Evening Standard Business