Those looking for accountants in Clevedon should take note: Hiring the wrong accounting firm could have a serious impact on your bottom line. BT, which has been the subject of ongoing controversy thanks to an accounting scandal in its Italian division, has recently announced a 37% slump in third-quarter profits. Additionally, the scandal has cut £8bn off the company’s market value.
The financial mismanagement of BT’s Italian sector, which has been in operation since the 1990s, was revealed over the summer. A whistleblower within the company finally approached the correct authorities to report the improper accounting practices, which had been ongoing for nearly a decade. It is suspected that the management of BT’s Italian division colluded with outside contractors to conceal the extent of their false accounting.
BT Scandal: A Fatal Oversight On The Part Of Auditors
Like all large corporations, BT has both an internal audit committee and a team of external auditors (PwC). However, neither of these security measures proved to be adequate; even PwC failed to pick up on the improper accounting practices. However, though the head of BT’s Italian division has already been let go of, BT’s chief executive, Gavin Patterson, has stated that he will not end PwC’s contract prematurely. ‘It is far too early to be making a decision about [PwC’s] future,’ Patterson said. ‘It is fair to say that in a couple of years we need to go through a [review] process but we will deal with that at the time.’
What BT has done is bring in a forensic accounting firm (KPMG) to perform forensic accounting duties. This will at least allow BT to assess the full cost of the scandal. ‘It can be very challenging to find out [the full cost] unless you’ve got forensic accountants and that’s what we’ve done in the last quarter. We’ve really got underneath this issue, we’ve scaled it, we’ve sized it and now we’ve acted,’ Patterson has stated.
Patterson has also openly expressed his anger over the situation (while simultaneously working to reassure investors). ‘Frankly, I am angry that the integrity of BT has been undermined by the wrongdoing of a few individuals in one part of the business,’ he said. ‘Many shareholders are angry. They have a right to be. What happened in Italy was completely unacceptable. The situation is now under control.’ In the eyes of many, however, the damage of this scandal has clearly already been done—and the effects will be felt for some time to come.
Choosing The Right Tax Accountant
For small businesses in the Clevedon area, situations like the BT scandal serve to underline the fact that the consequences of shoddy accounting practices extend far beyond fines and back payments. Hiring the wrong accountants in Clevedon could do lasting damage to your brand image and harm consumer trust. These problems tend to vastly outlive temporary inconveniences like tax fees and have much wider-reaching consequences. As such, when looking for accountants in Clevedon, make sure to research firms carefully. You may also refer to our article ‘Tax Professionals: Choosing A Tax Adviser For Your Small Business’ for further assistance.