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    My take on the latest at the PCAOB and KPMG

    Sunday, November 3rd, 2019

    In Episode 449 of the FCPA Compliance Report, I spoke with Tom Fox to discuss the current status of the KPMG defendants and what their conduct means for the audit profession going forward.



    An SEC Fine for KPMG in the PCAOB Data Theft Scandal and Another Horrible Revelation

    Wednesday, June 26th, 2019

    “Innovation demands risk-taking… which, in turn, entails redefining failure, stripping away its power to inhibit.” Chairman and CEO of KPMG Lynne Doughtie

    The Securities and Exchange Commission settled charges on Monday with KPMG LLP for the ongoing case of its partners altering past audit work after receiving stolen information about inspections of the firm that would be conducted by its regulator, the Public Company Accounting Oversight Board or PCAOB. Five former KPMG officials were charged last year in the case that alleged they schemed to interfere with the PCAOB’s ability to detect audit deficiencies at KPMG. Two have pleaded guilty, two were found guilty and one is still pending trial.

    But in a new almost more egregious revelation, the SEC’s order also finds that KPMG audit professionals, including lead audit engagement partners sent exam answers related to mandatory continuing professional education, ethics and integrity, and training mandated by a prior SEC order finding audit failures to other partners, and also solicited answers from and sent answers to their subordinates to help them also attain passing scores. In addition to paying a $50 million penalty, KPMG is required to evaluate its quality controls relating to ethics and integrity, identify audit professionals that violated ethics and integrity requirements in connection with training examinations within the past three years, and comply with a cease-and-desist order. The SEC’s order requires KPMG to retain an independent consultant to review and assess the firm’s ethics and integrity controls and its investigation. I will be writing more soon.



    The Question of the KPMG Whistleblower

    Sunday, March 10th, 2019

    The timeline of who told whom what and when, this time around for KPMG, is a bit more complicated than David Middendorf described in his testimony in the criminal case against him for allegedly conspiring to steal PCAOB inspection data.



    Update: KPMG: Whittle and Holder Plead Guilty

    Wednesday, November 28th, 2018

    KPMG partner Thomas Whittle broke ranks on October 29 and pleaded guilty to all five criminal charges. He is now cooperating with prosecutors. Do you have more information about this case? Leave a comment here, one I can leave unposted, if you wish to communicate confidentially or DM me on Twitter @retheauditors for Signal encrypted confidential messaging instructions.



    New Stories about the KPMG-PCAOB Scandal

    Monday, August 27th, 2018

    “Innovation demands risk-taking… which, in turn, entails redefining failure, stripping away its power to inhibit.” Chairman and CEO of KPMG Lynne Doughtie



    More on KPMG and the Precedents for Possible Punishment

    Sunday, April 23rd, 2017

    Why did they do it? The WSJ walks around the question but KPMG may face big fines and, I think, its partners and the PCAOB professional could face criminal charges.



    KPMG Takes Its Turn With a Big 4 -Sized Scandal

    Monday, April 17th, 2017

    The KPMG/PCAOB scandal is neither the first or last time a Big 4 firm reminded us that there’s nothing special anymore about being a Big 4 firm professional The firms, and their partners, are not capitalist eunuchs, immune from perverse incentives that advocates for free markets say, if big enough, can corrupt anyone.



    McKenna Interviewed On KPMG And FIFA By The Bottom Line Canada

    Monday, October 19th, 2015

    I was interviewed by The Bottom Line magazine in Canada back in June on KPMG’s role as auditor of FIFA.



    US Department of Justice v KPMG: Document Shows “Too Few To Fail” Was Opening Premise

    Saturday, April 19th, 2014

    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.



    Not That Satisfying: SEC Slams KPMG For Independence Violations

    Tuesday, January 28th, 2014

    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.