KPMG to pay $50m fine for using stolen watchdog data

SEC fine relates to altering audit work to avoid inspection failures

KMPG admitted wrongdoing as part of the settlement with the SEC, and agreed to hire an independent consultant to review its internal controls

KMPG admitted wrongdoing as part of the settlement with the SEC, and agreed to hire an independent consultant to review its internal controls

 

Accountancy and financial services company KPMG will pay $50 million (€44.5 million) to settle Securities and Exchange Commission (SEC) allegations that it altered past audit work after receiving stolen information from an industry watchdog.

The fine stems from an embarrassing chapter that led to five former KPMG employees being accused of interfering with inspections of the firm by the US Public Company Accounting Oversight Board, an agency overseen by the SEC that is the US’s main regulator of auditors. KMPG admitted wrongdoing as part of the settlement with the SEC, and agreed to hire an independent consultant to review its internal controls.

“KPMG’s ethical failures are simply unacceptable,” SEC chairman Jay Clayton said in the statement. “The resolution the Enforcement Division has reached holds KPMG accountable for its past failures and provides for continuing, heightened oversight to protect our markets and our investors.”

Inspection targets

The former senior KMPG officials sought and obtained a list of inspection targets by the accounting oversight board because the firm had experienced a high rate of deficiencies. With the data, the former employees oversaw a programme to revise certain audits to reduce the likelihood government inspectors would find shortfalls.

In an email statement, a company spokesperson said KPMG has learned important lessons and is a stronger firm because of steps taken to improve its culture, governance and compliance program.

The investigation, which also involved the justice department, resulted in January 2018 criminal charges against three former board officials. Federal prosecutors accused the employees, who went on to work for KPMG, of stealing information tied to PCAOB exams.

In its Monday statement, the SEC said its probe was continuing. – Bloomberg