Accountancy firm KPMG has been landed with a £3mln fine for blurring the lines between audit and other services in work for retailer Ted Baker PLC (LON:TBK).
The fine was levied by accountancy watchdog the Financial Reporting Council after KPMG appeared as an expert witness in a court case that involved the fashion store.
Compromised standards
This compromised its independence in audit work especially as the case fees were significantly higher, said the FRC.
Both the accountancy giant and senior partner Michael Barradell were sanctioned by the watchdog, with KPMG receiving a “severe reprimand” in addition to the fine.
Barradell was reprimanded and fined £80,000. Both fines were reduced after he and KPMG admitted misconduct.
Claudia Mortimore, interim executive counsel at the FRC, said where an auditor’s independence is lost, user confidence is likely to be undermined, something it takes very seriously.
KPMG added: “We welcome the FRC making clear that they do not allege a lack of integrity or objectivity on KPMG’s part and we note that our audit opinions on Ted Baker’s financial statements have not been called into question.”
The fine is the latest in a series of reprimands and investigations into work carried out by the accountancy firm.
KPMG was slammed by both MPs and the FRC for its audit of collapsed building contractor Carillion.
The firm was also fined £4.5mln by the FRC for its work at Watchstone, formerly known as Quindell, and is under investigation after off-licence chain Conviviality collapsed into administration in April.