A new KPMG tax shelter era document surfaced, in original format, that had not yet been cited or quoted from in any media reports. The document tells us that late in the negotiations, June 27, 2005 the DOJ still would not agree to all of KPMG’s terms, including promising not to criminally charge the firm. But the decision to make sure the firm did not “go under” had already been made. KPMG and its Skadden attorneys only had to make sure the DOJ didn’t, in a misguided show of sheer aggressiveness, cause another Arthur Andersen.
It’s been almost three years since I first broke the story of KPMG’s loaned tax staff arrangement with audit client GE. On January 24 the Securities and Exchange Commission (SEC) announced an $8.2 million settlement with KPMG over violations of auditor-independence rules. The wheels of justice turn very slowly. But the GE case was not one of the three cited as the subject of the enforcement action.
Here’s how KPMG Chairman John Veihmeyer explained Scott London’s inside trading and the firm’s response to accounting professors, an important stop in the audit industry supply chain.
This is the fourth big insider trading case in the least few years against a senior tenured partner that betrayed the public’s trust. In none of the cases did the firm’s “extensive” and “comprehensive” independence compliance programs spot the behavior or the illegal actions. Stay tuned. There will be much more to this story, I guarantee.
KPMG will no longer loan tax professionals to GE during busy season, according to a source close to the situation. KPMG was billing an extra $8-10 million, over and above the audit each year, for the service. Loaning, assigning, or “seconding” tax or any “bookkeeping” staff to an audit client is prohibited by the Sarbanes-Oxley Act […]
Going Concern reported yesterday that KPMG professionals have been ordered to preserve all correspondence and documentation related to the tax “loaned staff” assignment it has with long-time client GE. That means someone – the SEC or PCAOB – is investigating.
KPMG, external auditors for HBOS, were front and center in the controversy over written testimony from Paul Moore, HBOS’ former head of regulatory risk and a former KPMG partner. A guest posting on February 19, 2009 over at The Financial Times’ FT Alphaville blog.
The US Treasury recently affirmed reappointment of KPMG as Citi’s auditor for the 41st consecutive year. Maybe Treasury married KPMG all over again because they’re cheap compared to what Goldman and AIG are paying PwC. Or maybe Treasury feels like the mother who puts up with a gold digging daughter-in-law because said daughter-in-law saw mom kissing the tennis pro and mom knows her son has slept with the baby-sitter…
Dean Starkman edits The Audit, a critique of the business press at the Columbia Journalism Review. I had the good fortune to be cited recently – it’s the fourth time if you’re keeping count – by The Audit and Starkman for my coverage of KPMG’s settlements of their Countrywide and New Century litigation. Speaking of […]
It’s no coincidence that settlements were announced less than a week apart for both New Century and Countrywide. As two of the earliest subprime failures, all parties were probably anxious to clear some clutter and make room for other matters. But with no trials, the truth about KPMG’s role in both Countrywide and New Century will be buried.