This blog gives you the latest topical news plus some informal comments on them from ShareSoc’s directors and other contributors. These are the personal comments of the authors and not necessarily the considered views of ShareSoc. The writers may hold shares in the companies mentioned. You can add your own comments on the blog posts, but note that ShareSoc reserves the right to remove or edit comments where they are inappropriate or defamatory.

FRC Fines Grant Thornton £650k, Ted Baker and Tullow

A ShareSoc member emailed us to give his view:

This is terrible. Why wouldn’t the FRC name the partner and the company involved, especially when Grant Thornton has been responsible for so many mishaps.

We attend meetings with FRC and are always assured things will be different. All that happens is new people takeover, warm the seats for a few years, take the money and move on.

In the other article , the former NAO leader Sir Amyas Morse , a former PWC global managing partner now moves to Mazars. It is all musical chairs and lack of Independent oversight. Frankly, the state of U.K. governance is so bad now that recovering from it is impossible 


I agree.

Grant Thornton has been involved in a number of poor or defective audits, such as at Patisserie Holdings, Vimto, Globo and Salford University. The FRC claims that “We promote transparency and integrity in business” on its web site so why should we not be told the company concerned? It is surely not in the public interest to conceal the name of the company.

As for not naming the partner involved, what a lot of double think and double talk, dither and dubious logic from the FRC. Apparently the FRC thinks it would be unfair to name him as they have only fined him £20,000. Sorry chaps but a fine is a fine. Leave it to the customers to decide how best to manage this audit partner in the future. But hiding his history from other audit customers is simply wrong. It is reckless. Either don’t fine him, but give a warning; or if you fine him, then you must disclose the fact together with other relevant facts for others to judge how serious this really was.

I also agree with our correspondent’s other point. The FRC has been dominated by accountants and the FRC has acted far too often in the best interests of accountants and has failed to recognise that shareholders and other stakeholders are the ultimate users of accounts. The replacement of the FRC by ARGA may help address this problem, but culture runs deep and is difficult to change. That is one reason why ShareSoc, UKSA and I have been so keen to promote the separation of audit and consultancy services into separate firms in the big audit firms. The half baked proposal now being promoted of separate divisions within one combined audit/consultancy services firm won’t promote the radical change needed.


Ted Baker (TED) is another audit disaster. The year end stock levels had increased, but were audited and signed off at the agreed value. Those of us who have worked in retail (I once worked for Woolworths) know about stock and how likely it will be sold at the full value. The potential for stock problems are higher in fashion retailing when fashions can change quite rapidly making old stock worthless/ worth little. This is pretty basic stuff and I find it extraordinary that auditors could have got this one so wrong. gives more info. Shareholders has lost nearly 90% from the share price high.

Ted Baker’s auditor KPMG has been in place since 2001, and the audit was last put out to tender in 2012.

There is history of auditor problems at Ted Baker….the following is from

Date 30 July 2018

Summary of Misconduct / breach of Relevant Requirement

KPMG LLP (Member Firm / Auditor)
Michael Francis Barradell (Audit Engagement Partner)

Ted Baker Plc and No Ordinary Designer Label Limited

KPMG: (1) Severe Reprimand; (2) Fine of £3,000,000 reduced to £2,100,000 for early settlement; (3) Costs of £112,000.

Mr Barradell: (1) Reprimand; (2) Fine of £80,000 reduced to £46,800 for early settlement.

The Misconduct arose from KPMG providing expert witness services to Ted Baker in a Commercial Court claim. This was in breach of the Ethical Standards and led to the loss of KPMG’s independence in respect of the audits. There was a risk, which occurred, that the audit team would review the work of the expert when auditing Ted Baker’s treatment of the claim in its accounts and this posed an unacceptable self-review threat. In addition, there was a self- interest threat arising from the fact that the fees for the expert engagement significantly exceeded the audit fees in the relevant years, which KPMG and Mr Barradell also failed properly to consider.

It was not alleged that KPMG or Mr Barradell in fact lacked objectivity or integrity.

Tullow (TLW) share price has also dropped sharply, from a high of £14.62 several years ago, to 59p as I write. A year ago the share price was £2. The CEO and COO have just left. The company has announced they are good leavers and will retain rights relating to long term incentive schemes and be paid their contractually entitled salary and benefits for one year.

The Oct 11 trading statement now appears to have been overly optimistic. Just two months later, the Board now has a totally different view of the outlook. Meantime, the share price has dropped from 209p to 59p, wiping out about £2bn of market cap. I cannot see why the CEO and COO are good leavers. Some might argue that the Board have better things and higher priorities to do than fight a law case with the CEO and COO. However, the Board could delegate responsibility for this to one of its number.

It is time that someone stepped up to the plate and refused to go along with the good leaver nonsense. It is time for someone to dismiss their Executives for bad performance and refuse to pay them any golden goodbyes. The Execs may sue. They may well win their case. It might cost the company a million pounds and management time to take the case to court, but even if the company lost the case in court it would win the PR battle and surely shareholders will regard such money as well spent? It would set an example for others. It is all too cosy that (some not all) fund managers collude with companies to approve overgenerous remuneration packages. Fund managers are supposed to represent the views of ultimate investors, but (many) fail to do so. This behaviour gives capitalism a bad name and needs to be sorted.

Tullow would be a good place to start!


Cliff Weight

Director ShareSoc

Disclosure : I don’t own shares in Ted Baker or Tullow.

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