https://goingconcern.com/kpmg-partners-pcaob-indictment-sdny/
All accountants are supposed to be trustworthy and more ethical than any other person within an organization. Whether one is working with a private or public firm, it is imperative for them to maintain a high level of integrity by following all the guidelines that are stipulated in the accounting practice. However, at KPMG, many senior ranking officers were accused of violating accounting rules and procedures. They manipulated financial data and other vital information for individual purposes. As a result, the fraudulent and unreliable data turned away investors and damaged the reputation of the organization.
Some reviews conducted in KPMG audit detected problems in their auditing process. Several inspections further revealed that KPMG officials, including Britt, lied to partners to cover their fraudulent activities. Other employees were forced to indulge in spreading political rhetoric. It was also determined that the KPMG officials, sweet and Holder, attempted an elaborate cover-up that included deleting emails, burning true copies of the inspection. Holder deleted vital texts in order to avoid detection by the investigators. The indictments at the KPMG clearly raises more questions than answers about the credibility and integrity of the firm. As an audit firm, KPMG need to be more trustworthy and transparent during their daily engagements with the clients, partners and other stakeholders.
https://www.sec.gov/news/press-release/2019-95
Investigation conducted by the Securities and Exchange Commission unearthed malpractice in KPMG auditing processes. The SEC charged KPMG with manipulating past audit work after getting stolen data about the inspection of a company that would be conducted by PCAOB (public company accounting oversight board). Moreover, SEC investigations revealed that several KPMG audit officers lied on training exams by altering test results and improperly sharing answers. KPMG was charged for wrong conduct and violating the rules and regulations as stipulated in the accounting operating procedures. KPMG offenses forced them to pay a fine of 50 million dollars. They also said that they would promote an ethical culture in the future.
Five KPMG top officials were found culpable with interfering with PCAOB ability to monitor audit deficiencies in the firm. Steven Peiken admitted that “the seriousness of the misconduct at KPMG is indeed very astonishing! He further claimed that there is a need to punish such misconduct for preventing its future occurrence. Market professionals and investors usually depend on gatekeepers such as KPMG for them to make critical decisions at the capital markets. KPMG needs to evaluate quality controls relating to ethics and integrity to ensure that it does not violate accounting principles and standards.
SEC (Securities and Exchange Commission) asserts that 50 million fine was appropriate for KPMG to discourage a future repeat of cheating that had occurred in the firm. The allegations against KPMG read that “KPMG had stolen the test by using confidential information that was being supplied to them by an insider working at PCAOB (public company accounting oversight board) to improve its performance as an auditing firm. The cheating scandal through the manipulation of data by auditors compromised the integrity of KPMG as an auditing firm. As a result, they were fined $ 50 million because of the cheating occurred for a considerable period of time.
Going forward, KPMG admits that quality and integrity remain its primary goal despite them manipulating and altering the regulatory inspection procedures in the past. The foundation of KPMG should be based on trust and thus will promote a good relationship between them and their clients. They further claimed that they had learned important lessons since the inception of the company.
https://www.jdsupra.com/legalnews/compliance-into-the-weeds-episode-128-18866/
Securities and Exchange Commission (SEC) states that compliance with the legal rules as stipulated by the accounting operating procedures is essential at all times. However, it was established that KPMG violated the law, which undermined the credibility of the company. It also lowered the trust of the company and thus turned away investors. That notwithstanding, KPMG cheated on test exams and lied about partners. In this way, it lowered the integrity of the company.
As a result, the Securities and Exchange Commission charged KPMG for gross violation of accounting principles. They were required to pay $ 50 million as fine to discourage a future repeat of bad acts. Further, they were given by SEC guidelines on how they should behave in the future. The main goal of SEC was to ensure that KPMG complies with the laid down rules and regulations failure to which they will face heavy punishment.
In the article, KPMG was charged with two accounts of scandals that involved misconduct of the auditors at the firm. The article tries to determine which of the two scandals is worse, by collecting views and opinions from top accounting professionals. According to Jillian Alderman, the PCAOB scandal scored the highest. She asserts that PCAOB is tasked with the responsibility to conduct oversight for all registered audit companies in the United States. Thus, the scandal was likely to jeopardize audit quality and public confidence. The independence of PCAOB is paramount to ensure it performs its responsibility with high levels of integrity. Paul Clikeman believes that both scandals are worse. The first scandal involves top leadership at KPMG, which casts doubt on the transparency and integrity in the firm. The second scandal involves more people, including partners, which suggest that the culture where obedience to top leaders is more important than integrity.
Denise Dickins reveals that the second scandal that involves several employees colluding on cheating in the CPE ethics test is worse. This scandal distorts the public image of the company and damages its reputation as an ethical company. Trust is a vital ingredient in the audit companies because it improves public confidence and partners as well. Edward Ketz also believes that the CPE scandal is worse because it involves multiple employees. Therefore, it reveals to us the poor ethical culture within the organization because it not only touches on one employee but a large number of KPMG staff.
All the articles relate to each other because they all strive to unravel the scandals within KPMG Audit Company. The two main scandals that have been exposed in all the articles are; CPE cheating scandal and the PCAOB scandal.
The CPE scandal involved cheating during training exams. They managed to manipulate test results, which raised many questions about the culture at KPMG. If people cannot trust KPMG workers, then who else can they trust? In the second scandal, KPMG obtained vital information from PCAOB officials who had joined the firm. He managed to supply crucial data to the firm, which compromised the credibility of the inspection. If people cannot trust an organization that is mandated to carry out oversight to all audit firms, then the whole inspection process would be meaningless. KPMG was fined $ 50 million to discourage a repeat of the same scandal in the future.