Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Posts Tagged ‘Big 4

SEC considering a $50M fine against KPMG

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It will take a bigger stack of currency than shown above if the SEC follows through with what they are considering. Image courtesy of Adobe Stock.

The Wall Street Journal reported on June 13, 2019 that the SEC is considering a fine of $50,000,000 against the Big 4 firm KPMG for it gaining access to the highly confidential list of audits scheduled for inspection by PCAOB.

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Written by Jim Ulvog

June 14, 2019, 10:20 am at 10:20 am

Posted in Audits

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Two convictions for former-KPMG staff gaining access to PCOAB inspection list

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Image courtesy of Adobe Stock.

Back in March a jury returned convictions for two of the players in the effort to get a list of the audits which were scheduled to be inspected by PCAOB.

(Yeah, yeah, conviction was in March and I’m mentioning it now in June. I’m just a tad bit late to the story but still want to discuss it.)

A senior level former-partner, David Middendorf, was found guilty on 4 of 5 counts. He was the National Managing Partner for Audit Quality and Professional Practice Group, in the firm’s Department of Professional Practice. That means he was the top technician in the national office of top technicians.

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Written by Jim Ulvog

June 14, 2019, 9:20 am at 9:20 am

Posted in Audits

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Trial of former partner at KPMG starts today

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Image courtesy of Adobe Stock.

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.

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Written by Jim Ulvog

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

Posted in Audits

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Update on KPMG gaining access to PCAOB inspection schedule. Possible impact on inspection results.

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….what might need improving at KPMG based on PCAOB reports. Image courtesy of Adobe Stock

The PCAOB released results of the inspections during the 2017 cycle. The results are not pretty.  In addition, PCAOB released previously confidential comments from the 2015 report.

Michael Rapoport has the details in the Wall Street Journal on January 25, 2019:  KPMG Gets Poor Marks From Audit  Regulator / Regulator unseals sharp criticism of Big Four accounting firm’s quality during period spanning leak scandal.

In a painful phrase, the article quotes prosecutors as labeling this as a

“steal the exam” scheme.

In the 2016 audit cycle, PCAOB replaced 11 engagements that had already been reviewed with 10 others. Of the 11 replaced, 3 had significant deficiencies. Of the 10 replacements, 9 had deficiencies.

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Written by Jim Ulvog

January 29, 2019, 7:00 am at 7:00 am

Posted in Audits

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List of key players in KPMG fiasco over leaked PCAOB inspection lists

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Three accountants in this story entered the above building innocent and left as a felon. Image courtesy of Adobe Stock.

Sometimes you gotta’ have a scorecard to keep track of the players and the story. After a former partner pled guilty this week in the fiasco at KPMG over leaking of PCAOB inspection targets, I had to sort out again who was who.

So, I sketched out a list of the players and a bit of info about each.

Will update this list as the criminal cases move forward.

The roster of players and their status: Read the rest of this entry »

Written by Jim Ulvog

October 31, 2018, 8:41 am at 8:41 am

Posted in Audits

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Recap of indictments for KPMG inspection document fiasco

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Image courtesy of Adobe Stock

For a year we have known of a fiasco at KPMG in which the firm obtained a list of PCAOB’s plans for inspecting KPMG audit workpapers. That information was floated around at the senior levels of the firm. Multiple people were fired.

This week, the Department of Justice unsealed indictments against four former KPMG employees and one former PCAOB employee.

Let’s dive into the details.

Players

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Written by Jim Ulvog

January 25, 2018, 9:47 am at 9:47 am

Posted in Audits

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Minor updates while we wait for more news on the PCAOB leak to KPMG

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Image courtesy of Adobe Stock.

There is little new information on the leak from PCAOB to KPMG since the first reports.

I’m expecting to hear a lot more, most likely after PCAOB and SEC finish their investigation. If I read this situation correctly, and if public reports are correct, there will be sanctions from SEC against some of the KPMG staff. At that point, the SEC public documents will tell us a lot more.

While we wait, here are two articles that give some general background.

4/17/17 – Francine McKenna at re:The Auditors – KPMG takes its turn with a Big 4-sized scandal – If you’ve been looking for an article with a long time horizon to survey the assorted scandals in the Big 4 world, this post will give you the deep background you want.

Leak from PCAOB to KPMG

Post describes the current information that is public on the leak of inspection engagements from someone at PCAOB to someone at KPMG. Article illustrates there still is not a lot visible in the public realm to answer all the questions that come to mind.

Ms. McKenna quotes my comment earlier on the PCAOB-KPMG leak feeling to me like a red flag of something deeper. She agrees with me.

Each firm has their own round of fiascos

All the firms have had their turn of embarrassing publicity, often with fines or undisclosed settlements.

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Written by Jim Ulvog

April 18, 2017, 9:05 am at 9:05 am

Posted in Audits, Pondering

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