Current Developments in Accounting

Current Developments in Accounting 1
Current Developments in Accounting

Current Developments in Accounting 2
Table of Contents
Q.1 Accounting Issues.................................................................................................................................3
Introduction.............................................................................................................................................3
Discussion on the Article.........................................................................................................................4
Discussion of the Theory and its Application on KPMG.........................................................................5
Conclusion...............................................................................................................................................7
Q.2 Accounting Standard Update................................................................................................................8
Opinions and Comments of Other industry Players on the Changes......................................................11
Discussion and Analysis of Comments..................................................................................................14
References.................................................................................................................................................18

Current Developments in Accounting 3
Q.1 Accounting Issues
Introduction
This report emphasizes on the discussion of the news article named Concerns raised about ‘too
big to fail’ KPMG as it facilitates in the evaluation of the issues faced by KPMG in relation to
accounting practices. Besides this, it also provides the information related to different theories
and concepts related to accounting and relate it to the issues faced by the company.
Name of the Article Chosen: “Concerns raised about ‘too big to fail’ KPMG”
Author: Madison Marriage, Caroline Binham and Martin Arnold (Published on: 20th July 2018)
Name of the Magazine: Financial Times
Source of the article: https://www.ft.com/content/f660b6a2-8b75-11e8-bf9e-8771d5404543

Current Developments in Accounting 4
Discussion on the Article
It is identified that there are several companies such as Arthur Anderson that has collapsed due to
the existence of the accounting scandal by Enron in the year 2002 due to which the company has
written off various audit professions. It is also found out that there are various big accounting
firms that could fail in a catastrophic manner due to the impact of Arthur Andersen demise. It is
also found out that there is a decline in the profits of the KPMG before tax to fifth in the year
2017 to £301 million. The company has put aside £ 56 million for the purpose of meeting out the
potential fines and legal costs. It is also estimated that KPMG will overcome its recent
difficulties as it is in favor of the interests of regulators and competitors such as PwC, Deloitte
and EY. KPMG is involved in several big scandals across three continents in spite of this, its
biggest international clients are not distancing from the firm (Marriage, Binham & Arnold,
2018).
The different scandals in which there is an involvement of KPMG such as collapse of Carillion
and from the investigation it is found out that the three partners of the KPMG are accused of
leaking confidential information in improving inspection of the results for the firm. Despite of
the involvement in different accounting scandal, the company is able to attain the contract of
audit for the mining company such as Rio Tinto. The financial health of KPMG is strong and
have gained growth across advisory, audit and tax. KPMG has failed in spotting the signs of
financial instability which led to financial crisis due to which the regulators have increased its
scrutiny (Marriage, Binham & Arnold, 2018).
It is identified that the commission has reported that the auditors have failed to expose the risks
related to the banks in their financial statements in the year 2013 during the crisis. The audit
done by KPMG has failed to inform the users about the financial condition of the banks in an
accurate manner. The commission has criticized as the quality of the audits in an effective