Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Trial of former partner at KPMG starts today

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One former partner at KPMG and a former PCAOB staffer get their day in court today, February 11, 2019. Actually, it will be about four weeks in court, according to Michael Rapoport of the Wall Street Journal: KPMG Ex-Partner Goes on Trial in ‘Steal the Exam’ Scandal.

David Middendorf was a KPMG partner until April 2017. He was National Managing Partner for Audit Quality and Professional Practice Group, in the Department of Professional Practice (DPP). He reported to the Vice Chair of Audit.

Jeffrey Wada was a PCAOB Inspections Leader from February 2012 through February 2017.

Both are in court today defending themselves against charges they received and leaked, respectively, the list of KPMG audits which were scheduled for inspection by PCAOB.

Awaiting a separate trial in October is David Britt. He was a KPMG partner until February 2017 and at that time was Co-leader of the Banking and Capital Markets Group, reporting to the Chief Auditor.

I previously provided an Update on KPMG gaining access to PCAOB inspection schedule. Possible impact on inspection results.

Today’s WSJ article quotes one of Mr. Middendorf’s attorneys questioned PCAOB’s release of the information shortly before the trial and the emphasis on the negative inspection results as trying to make KPMG look worse.

Adrienne Gonzalez has an update about the KPMG fiasco on 1/28/19 at Going Concern in her typically vivid style:  The PCAOB Needs to Just Beat the **** Out of KPMG Already. (If you are not familiar with her writing, be advised her typically vivid style involves use of a few naughty words. Make that more than a few.)

You might also want to scroll down to the comment by Bob Hirth. He explains how the PCAOB selection process starts with engagements that seem to be unusually complex and then looks at the most risky areas of those risky engagements. Keep that protocol in mind as you interpret the high deficiency rates reported in PCAOB inspections.

Three other former staff of KPMG have pleaded guilty and await sentencing. Two of those people previously worked at PCAOB.

Today’s WSJ article says two of those three are expected to testify in the current trial.

To keep track of the players, check out my List of key players in KPMG fiasco over leaked PCAOB inspection lists.

Written by Jim Ulvog

February 11, 2019, 8:04 am at 8:04 am

Posted in Audits

Tagged with ,

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