My take on the latest at the PCAOB and KPMG
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.
The Question of the KPMG Whistleblower
/in Audit Quality, KPMG, PCAOB, SEC, The Case Against The AuditorsThe 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.
Another Update on the Case of FDIC v PricewaterhouseCoopers re: Colonial Bank
/in Fraud, Independence, Internal Audit, Latest, MF Global, PCAOB, Pure Content, Sarbanes-Oxley, SEC, The Case Against The AuditorsOn February 28 the US Justice Department fined Deloitte & Touche LLP $149.5 million for alleged fraud against the government related to its role as the independent outside auditor of Taylor, Bean & Whitaker Mortgage Corp. Also: The damages phase of the FDIC v. PwC case regarding Colonial Bank is set to begin in Washington DC on March 20.
Piling Up For PwC
/in Audit Quality, Independence, KPMG, Liability Caps, PCAOB, PricewaterhouseCoopers, Pure Content, Regulators, Laws, Standards, Regulations, Sarbanes-Oxley, SEC, The Case Against The AuditorsUpdate: The PCAOB is investigating PwC for its tax avoidance advice to Caterpillar, the Wall Street Journal is reporting. One down, more than 100+ PwC audit clients advised via Luxembourg to go…
Auditor Independence: Another Case of Misplaced Loyalty
/2 Comments/in Independence, PCAOB, Pure Content, Sarbanes-Oxley, SEC, The Case Against The AuditorsRyan Adams testified on behalf of PwC in an important court case. How can PwC be independent of Adam’s employer Marin Software, and Adams, the Financial Reporting Director at this newly public PwC-audited client company, if he’s testifying on PwC’s behalf in litigation that could impact PwC’s business model in California and, perhaps, nationally?
US Department of Justice v KPMG: Document Shows “Too Few To Fail” Was Opening Premise
/2 Comments/in Attorney-Client Privilege, PCAOB, Pure Content, Regulators, Laws, Standards, Regulations, Sarbanes-Oxley, SEC, The Case Against The AuditorsA 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
/3 Comments/in Audit Firm Management, Independence, KPMG, PCAOB, Pure Content, Regulators, Laws, Standards, Regulations, Sarbanes-Oxley, SEC, You Can Quote Me On ThatIt’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.
Winning! PwC Argues Both Sides Of The Partner Naming Debate
/2 Comments/in Audit Quality, Bear Stearns, Liability Caps, PCAOB, PricewaterhouseCoopers, Pure Content, Regulators, Laws, Standards, Regulations, Sarbanes-Oxley, The Case Against The AuditorsHow do the audit firms keep winning the war while losing battles left and right? They use the law and the courts to delay, deter and distract from transparency by settling, and sealing what they can, before the public can find out what silly arguments they often make in their defense.
Early Returns: Scott London, KPMG and Another Partner Trading On Inside Information
/1 Comment/in Fraud, Independence, PCAOB, Regulators, Laws, Standards, Regulations, Sarbanes-Oxley, SEC, The Case Against The AuditorsThis 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.
E&Y, Their Audit Client Wal-Mart, and Value Pricing
/5 Comments/in EY, Fraud, Independence, PCAOB, Pure Content, Regulators, Laws, Standards, Regulations, Sarbanes-Oxley, SEC, You Can Quote Me On ThatThis post about Ernst & Young’s aggressive tax advice to audit client Wal-Mart was originally posted October 29, 2007. It’s worth everyone – I’m talking to you SEC and PCAOB – taking another look at this given Wal-Mart’s new Mexican bribery problems and the SEC investigation of Ernst & Young for tax lobbying to audit clients. (Ernst & Young has been silent and left out of most media discussion about Wal-Mart’s FCPA problems in Mexico and elsewhere.)
At American Banker: Auditors Give Banks a Pass on Reserves
/4 Comments/in Fair Value, PCAOB, Pure Content, Regulators, Laws, Standards, Regulations, Sarbanes-Oxley, SEC, The Case Against The AuditorsMy column at American Banker last week focused on the latest PCAOB inspection report for KPMG. We’ve got three more “Big Four” inspections reports to come – Ernst & Young, Deloitte and PwC. Don’t be surprised if you see the same focus on loan loss and repurchase reserves and the same kinds of auditor deficiencies.
Big Four Auditors and Jury Trials: Not In The U.S.
/19 Comments/in Audit Quality, BDO, Deloitte, EY, Grant Thornton, KPMG, Latest, PCAOB, PricewaterhouseCoopers, Pure Content, Regulators, Laws, Standards, Regulations, Sarbanes-Oxley, The Case Against The Auditors, The FirmsYou have to go outside of the US to see a trial of a Big Four audit firm to know what I’m talking about. Australia’s Centro case against PwC or Canada’s Nortel case where Deloitte partners testified recently tell you everything you need to know about why the Big Four will settle every time. Rather than have a jury and the public hear and see the pathetic state of the audit profession, its inability to stop executives who want to cheat, and its unwillingness to acknowledge liability as a firm when it screws up, the firms will reach into their seemingly bottomless pockets and pay up.