Firm Fined $50M for Stolen Data & CE Exam Fraud
Accounting firm KPMG LLC has admitted to using stolen information to alter some of its previous audit work and cheating on training exams by sharing answers and manipulating test results, according to the Securities and Exchange Commission (SEC). KPMG has agreed to pay a $50 million penalty and hire an independent consultant to assess the firm’s ethics and integrity controls as well as its compliance.
Five former KPMG officials were charged last year in the case that alleged they schemed to interfere with the PCAOB’s ability to detect audit deficiencies at KPMG. According to the report, 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. Two have pleaded guilty, two were found guilty and one is still pending trial.
The SEC’s order also finds that KPMG audit professionals, including lead audit engagement partners sent exam answers related to mandatory continuing professional education, ethics and integrity, and training mandated by a prior SEC order finding audit failures to other partners, and also solicited answers from and sent answers to their subordinates to help them attain passing scores.
Additionally, the SEC’s order found that certain KPMG audit professionals manipulated an internal server hosting training exams to lower the score required for passing. By changing a number embedded in a hyperlink, they manually overrode the minimum passing scores required for exams. At times, audit professionals achieved passing scores while answering less than 25 percent of the questions correctly.
To read the complete SEC press release, “KPMG Paying $50 Million Penalty for Illicit Use of PCAOB Data and Cheating on Training Exams,” click here.