The total includes the disgorgement of $5,266,347, prejudgment interest of $1,185,002 and a civil money penalty of $1,775,000.
The SEC says that at various times from 2007 through the end of 2011, KPMG provided non-audit services to affiliates of three of its SEC audit clients.
In one case, the accounting firm hired an employee who had recently retired from a senior position client company's affiliate, and then loaned him back to that affiliate to do the same work he had done as an employee of that entity. That individual, who had been Senior Tax Counsel in the affiliate's Office of Tax Affairs' Trade & Customs Group, had no other duties at KPMG, the SEC says. He performed 1,897 hours of services to the KPMG client's affiliate between November 2007 until December 2008 when the firm terminated the contract.
For a second audit client, KPMG performed restructuring, corporate finance, and expert services and its services to the third client included bookkeeping and payroll KPMG was the outside auditor for the company from 2005 until December 2011. This client was purchased by a large financial services organization in on Sept. 1, 2006. Despite public disclosures, the KPMG audit engagement teams did not recognize the financial services firm as a controlling affiliate for independence purposes until late 2011.
Moreover, six partners in the KPMG chain of command and two partners in the KPMG office that conducted Company B's audits owned stock in the financial services firm, which the SEC says is another violation of the independence rule.
In the case of the third client, KPMG had been providing non-audit services before it won the contract for performing the 2008 audit and quarterly reviews of that business' consolidated financial statements. KPMG had previously provided bookkeeping and payroll services to the client's affiliates in11 countries. A list of those services was provided by the client on February 22, 2008 and the accounting firm was supposed to wrap up those services by July 1, 2008.
The audit team concluded that KPMG's independence would not be impaired because of the locations and services provided were not material to results. KPMG kept performing those services through June 2008. However, the SEC says the rules do not provide for limited transition periodsLast modified on Wednesday, 29 January 2014