I called this one more than a month ago! Glad to see the Wall Slow Journal is finally catching up…Would the WSJ have sat on the story so KPMG could enjoy, for a little while longer, the “oral pleasure” they received the week before?
KPMG Germany’s Failure to Spot Siemens Problems Raises Questions
By MIKE ESTERL in Frankfurt, DAVID CRAWFORD in Berlin and DAVID REILLY in New York
February 24, 2007; Page B3
German prosecutors investigating alleged bribery at Siemens AG are looking at whether its longtime auditor, KPMG’s German affiliate, ignored questionable payments on the conglomerate’s books, a person familiar with the matter said.
The scrutiny was prompted by allegations by two Siemens executives under investigation in the probe. Their claims raise questions about whether KPMG Germany could have told authorities and investors that the Munich-based company’s systems for preventing accounting mistakes and fraud were flawed before news of the investigation surfaced late last year…
KPMG Germany is one of the most important parts of KPMG’s global network. Its German arm audits four of KPMG’s 10 biggest clients by fees, according to accounting research firm AuditAnalytics Inc. In the fiscal year ended Sept. 30, Siemens paid KPMG €87.5 million in total fees world-wide.
At least two veteran Siemens executives jailed late last year as part of the criminal probe have alleged to prosecutors that KPMG Germany detected questionable payments in recent years, but chose to ignore them.
• The Situation: The German affiliate of KPMG is on the hot seat for its auditing work of Siemens AG.
• Background: Despite police probes of money laundering, KPMG gave Siemens books an OK. After more inquiries by authorities, it said something was amiss.
• What Now: The company faces questions over why it didn’t dig deep enough into Siemens’s accounting.