WASHINGTON (Reuters) – KPMG LLP has agreed to pay a $50 million fine over allegations former staffers used stolen information to alter some of the accounting firm’s previous audit work and cheated on training exams, the U.S. Securities and Exchange Commission said on Monday.
FILE PHOTO: A KPMG logo is seen on their downtown office tower in Los Angeles, California May 13, 2014. REUTERS/Mike Blake/File Photo
KPMG admitted to the SEC’s allegations and agreed to hire an independent consultant to assess the firm’s ethics and integrity controls, as well as its compliance related to abuse of the exams issued by the Public Company Accounting Oversight Board, the SEC said in a statement.
The fine was one of the largest ever imposed on an auditor by the SEC.
“The breadth and seriousness of the misconduct at issue here is, frankly, astonishing,” said Steven Peikin, one of the SEC’s enforcement directors. “This settlement reflects the need to severely punish this sort of wrongdoing while putting in place measures designed to prevent its recurrence.”
A KPMG spokesman said on Monday the auditor has “learned important lessons through this experience,” adding that the firm is stronger as a result of actions it is taking “to strengthen our culture, our governance and our compliance program.”
While the U.S. Congress created the accounting board to police the work of public-company auditors, the SEC retains the authority to inspect auditors on its own.
Five former PCAOB staffers had been charged in 2018 for making unauthorized disclosures related to KPMG’s audits.
The SEC said at the time that the firm had experienced a high rate of PCAOB deficiency findings in prior inspections and improvement of these findings had become a priority.
“Armed with the PCAOB data, the now-former KPMG personnel oversaw a program to review and revise certain audit work papers after the audit reports had been issued to reduce the likelihood of deficiencies being found during inspections.”
SEC Chairman Jay Clayton ordered his staff in January 2018 to monitor the auditor in relation to alleged misappropriation of PCAOB information.
An agency official added on Monday that the regulator will continue investigating the firm and other potential parties involved.
Reporting by Katanga Johnson, Susan Heavey and Tim Ahmann; Editing by Paul Simao