The last person to face justice in KPMG’s fiasco of gaining illegal access to PCAOB inspection lists entered a guilty plea a few weeks before his scheduled trial.
David Britt entered a guilty plea on 10/3/19 to one count conspiracy to commit wire fraud. His trial would have otherwise started on 10/21/19.
The most senior level former partner charged in the KPMG “steal the exam” fiasco was sentenced to one year and one day in prison for his role in the leak of PCAOB inspection targets. David Middendorf received a fraction of the 37-46 months requested by US Attorney office and 46-57 months recommended by the United States Probation Office.
Crain’s New York Business – Aaron Elstein – 9/11/19 – Former top KPMG partner gets a year and a day in prison – Article points out the sentence of a year plus one day means Mr. Middendorf is eligible for good behavior credit.
The second sentencing in the fiasco of leaking PCAOB’s inspection list to KPMG is set for 10:30 today, 9/11/19.
Background on Mr. Middendorf sentencing
David Middendorf will face federal judge J. Paul Oetken to learn how long he will be in federal housing. Judge Oetken is handling all of the trials in this case.
On 7/26/19 Mr. Middendorf submitted his arguments on sentencing (docket #379). If you have lots of time on your hand, you can also read the 25 attachments.
The US Attorney filing had this comment (#394), which I’ll quote:
FASB officially issued an exposure draft on August 15, 2019 which proposes a one year delay for implementing three new accounting standards. Two of these proposed delays will affect many charities.
Effective date for SEC filers would not be changed.
I won’t discuss any changes for public business entities (PBE). Readers of my blog who fall into that category would be non-profits that are considered to be conduit bond obligors and EBPs that file their financials with the SEC.
A former Inspections Leader at PCAOB who went to work for KPMG as an Executive Director and was involved in leaking lists of audits scheduled for inspection was sentenced today.
If you get a peer review of your attestation practice, I heard a few ideas in the AICPA’s Peer Review Conference you might want to know about. I attended this year’s conference via webcast. First time I’ve gone through a 16 hour class online. The technology worked acceptably well. Saving the travel time was wonderful.
Annual update to Peer Review Information form
Starting next year, May 2020 specifically, every firm enrolled in the peer review program will need to update the Peer Review Information (PRI) form annually. Each firm will have to log into PRIMA and update the list of the type of engagements performed.
Not sure the reasons this change is going into effect. One component is so AICPA can monitor for changes the nature of a firm’s client base to see if a higher level of service is needed.
Focus areas in system reviews
The AICPA surveyed CPAs who provide a large number of reviews asking them what portion of their peer review clients had significant struggles with complying with the risk assessment standards. …
Two of the rules are particularly significant to the non-profit community while two will affect few charities.
The article uses a new method of identifying effective dates. It mentions January 1 of the year the standard will first be effective instead of the ol’ “fiscal years beginning after December 15” phrasing usually used..
Here are some fun or interesting or useful tidbits from the October 2018 A&A and the June 2019 Not-for-profit conferences presented by California Society of CPAs that apply to not-for-profit organizations.
Non-attest services and Yellow Book independence. Everyone probably knows that charities with more than $2 million of revenue who are registered with the California Attorney General must have an audit. Excluded from the requirement would be religious organizations, who are exempt from registering with the AG.
That requirement was created by the Nonprofit Integrity Act of 2004, so it’s old news.
The best payoff from attending CPE conferences is to compare every piece of information you hear to what you think you know. So, here is one of the big rewards for me attending this class…
If you are an auditor and that is a diagram of new audit rules, then you need to completely understand the graph. Image courtesy of Adobe Stock.
Here are some fun or interesting or useful tidbits from the October 2018 A&A and the June 2019 Not-for-profit conferences presented by California Society of CPAs.
Here are some fun or interesting or useful tidbits from the October 2018 A&A and the June 2019 Not-for-profit conferences presented by California Society of CPAs.
One speaker said there are several common issues for weaknesses in risk assessment:
Limited assessment
No linkage (relating the assessment of risks to further audit procedures)
Poor use of third-party practice tools
No assessment of IT risks
Not doing any risk assessment is now a major problem for you in a peer review if you missed the boat on the risk suite of standards.
For Yellow Book audit, the workpapers must document SKE (skills, knowledge, experience) of staff overseeing non-attest services. Although the professional standards do not exactly require documentation of SKE for non-attest service on a non-yellow book audit, the speaker said (if I heard correctly) that the California Peer Review Committee has a considered opinion that such documentation is required.
So, if you have non-attest services on a non-yellow book audit, …
To get ready for a writing project this summer, I’ve been going over my notes from some CPE conferences and classes.
Thought I’d share some of the fun or interesting or useful tidbits from the October 2018 A&A and the June 2019 Not-for-profit conferences presented by California Society of CPAs.
For more discussion on the dual fiascos of the now-former-senior KPMG partners getting the PCAOB inspection list and altering workpapers along with cheating on continuing education classes, check out these two articles:
Article provides a good summary of the settlement.
Try this on for a word picture, which I’m expanding from Francine’s description in the article:
Getting a $50M fine from stealing the inspection list (and then altering workpapers) is the powerful right punch that everyone was expecting. The test cheating part is a staggering left hook that nobody saw coming.
The Update #88 newsletter from California Board of Accountancy for Winter 2019 lists 22 disciplinary actions, by my count. These are the actions taken with effective dates through the end of 2018.
Here is a tally of license revocations, surrendered licenses, and revocations with stay categorized by the underlying issue as I aggregate them:
