Accounting Irregularities at Patisserie Valerie UK
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Added on 2023/01/11
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This essay discusses the accounting irregularities at Patisserie Valerie UK, including material misstatements in financial statements and the impact of accountability on different actions.
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Accounting irregularities at Patisserie Valerie UK
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Table of Contents Table of Contents.............................................................................................................................2 INTRODUCTION...........................................................................................................................1 MAIN BODY..................................................................................................................................1 Accounting irregularities at Patisserie Valerie UK.....................................................................1 CONCLUSION................................................................................................................................3 REFERENCES................................................................................................................................4
INTRODUCTION Present essay is based uponPatisserie Valerie which is one of the biggest cafes in United Kingdom. The main focus of the discussion is upon the material misstatements that were identified in the financial statements of the organization.The topics that are covered in it are analysis of fraudulent misstatement, impact of accountability upon relation of different actions, identification of parties responsible for mistakes etc. MAIN BODY Accounting irregularities at Patisserie Valerie UK From the case of Patisseries Valerie UK, it has been determined that there were carious mistakes in the final accounts of the café. If an entity formulates all the accounts according to accounting principles then it is not possible that it may result in materialistic mistakes. All the accounting representations might have enabled this fraudulent misstatement incident to take place. The details that were mentioned by the accountants of the entity were not accurate which resulted in theblack hole of 20 million pounds(Bhaskar and Flower, 2019). If the organization would have followed all the rules and regulations of accounting then the issues that were faced by the entity were not occurred. It is beneficial to reflect the economic reality of a business and it is not possible that accurately and appropriately applied accounting principles may result in material misstatement. Accountability can be defined as the responsibility of an individuals for the actions that are taken by him or her. If the person is not able to take the charge of previously taken steps then it is not possible to be accountable. In all the business organizations such as Patisserie Valerie accounting is considered as the cause of all the mistakes that are made in the financial statement. This set of mid of entities is not right because if all the principles are followed appropriately then it may reduce possibility of all the errors in the final accounts. There are different forms of accountability such as ethical, administrative, market etc. All of them can affect the relationship between the actors of an organization like Patisserie Valerie because when a person who is responsible for a mistake is not taking charge of it then it may affect relations with others. It couldalsobeconsideredasunethicalaccountabilityinwhichonepersondonottake responsibility of all the steps that were taken(Duickley, 2019). 1
When material misstatement is identified in the financial statements then it affects the position of business in the market. It is very important for all the entities to make sure that they are formulating all the financial statements properly so that possibility of mistakes could be ignored. While analyzing the case of Patisserie Valerie it has been identified that there were various mistakes that were made while generating final accounts. All of them resulted in black hole of 20 million pound and other material misstatements. While trying to identify the parties which are responsible or accountable for the same various difficulties were faced because it was not easy to analyze the one party which is accountable for it. When the case of the café was assessed it was determined that one day the entity discovered that it has 28 million pounds in cash and just one day later it announced that there is a shortage of 9 million pounds. All these factors are stating that the final accounts are not formulated properly and accounting principles along with rules and regulation are not followed which has resulted in all the errors and mistakes. On 14thOctober 2018 it was discovered that company is having overdrafts of almost 10 million pounds. There were various reasons which were resulted in tough identification of the party which was responsible for the material misstatement(Ibrahim, Tahir and N'Guessan, 2020). The main reason for the same was continuous changes in the announcements of the cafe that it has 27 million pounds and then there is a shortage of 9 million pounds. Apart from this, one announcement was related to overdraft. All these factors created confusion and resulted in tough identification of the party which is responsible for the same. Another reason for it was, lack of involvement of boards in the announcements. All of them were made in the behalf of the whole entity not a single one was made by a particular person. Due to this, it was not easy to identify the party which is accountable for the material misstatements. It is very important for all the entities to make sure that all the accounting principles are followed so that possibility of all the situations that are faced by Patisserie Valerie could be ignored. One of the key responsibilities of mangers is to pay attention towards efficiency so that they can control the performance of business. If the final accounts are not efficient enough then it is not possible to fulfil requirements of external stakeholders. If they are extremely focused with efficiency then it may affect the development of accounting control systems overtime. Main reason of it is that when the accounts will be efficient then it will help to control all the possibilities of material misstatements in future. 2
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Accountingpractitionersandresearcherscontributetoabetterunderstandingand implementation of control because they are highly focused with the analysis of the factors that may affect efficiency of an entity. Afterwards, they find the ways in which all problems that are taking place could be resolved systematically. They try to aware all the individuals regarding the importance of control and the way in which it cold be implemented to ignore negative events in future(Kassem, 2019). CONCLUSION From the above discussion it has been concluded that it is essential for all the accounting practitioners to be aware of all the material misstatements so that effective ways to deal wit them could be figured out.Patisserie Valerie was having various errors in its final accounts because the entity was not focused with appropriate use of accounting principles. 3
REFERENCES Books and Journals: Bhaskar, K. and Flower, J., 2019.Financial failures and scandals: From Enron to Carillion. Routledge. Duickley, D., 2019. UK recommends break-up of Big 4 to reform auditing. Ibrahim, S., Tahir, M. and N'Guessan, K., 2020. Earnings Management and Fraud: A Theoretical Background and Discussion. InHandbook of Research on Accounting and Financial Studies(pp. 343-364). IGI Global. Kassem, R., 2019. Understanding financial reporting fraud in Egypt: evidence from the audit field.Third World Quarterly. 40(11). pp.1996-2015. 4