KPMG has agreed to settle with the US Securities and Exchange Commission (SEC) for a sum of $50m after it was found to have altered past audit work and cheated on internal training exams.
SEC alleged that KPMG received stolen information about an investigation into a company by the Public Company Accounting Oversight Board (PCAOB), and subsequently acted to alter previous audits.
Moreover, KPMG audit professionals who had undertaken training exams sent answers and tips to their colleagues in order to help them pass. They took photos of the papers and sent the answers either via email, or by printing them and handing them over manually.
SEC Chairman, Jay Clayton commented that:
“High-quality financial statements prepared and reviewed in accordance with applicable accounting principles and professional standards are the bedrock of our capital markets. KPMG’s ethical failures are simply unacceptable.”
In addition to the $50m penalty fine, KPMG must now evaluate its quality controls relating to ethics and integrity, identify any colleagues that breach those controls, retain and instruct independent consultant to review their ethics.