KPMG fired 6 of their auditors this past week of April 10, 2017. The firings even included the head of their audit practice in the United States.
What happened was that they were given an improper heads-up ahead of Public Company Accounting Oversight Board PCAOB inspection.
What Happened Between KPMG And The PCAOB?
There was an employee who just joined big 4 accounting firm kpmg from the PCAOB. This employee received confidential information that one of KPMG’s audits would be receiving a PCAOB inspection. He shared this information with other fellow employees at KPMG.
KPMG learned this information from a whistle-blower from within the firm. They said that they learned of this information in late February of 2017. Upon learning of this information KPMG immediately reported this information to both the SEC and PCAOB.
KPMG then launched an investigation that was headed by a law firm. Reportedly these individuals knew of this illegal insider info and failed to report it through the appropriate channels. This was contrary to KPMG’s code of ethics, so they fired these employees.
Scott Marcello was the partner that led the US Audit Practice for KPMG.
Who Is Taking Over KPMG’s Audit Leadership Roles?
Frank Casal will be taking over for Scott Marcello as the lead audit partner in the US. His title is Vice Chair of the audit practice for the firm.
He has been with KPMG for 38 years. He was formerly on the US board of directors for KPMG. Frank has been on KPMG’s largest clients like General Electric (GE).
Jackie Daylor has been named as the partner in charge of Audit Quality and Professional Practice
It seems that the big 4 accounting firms have been having a hard time with ethics. I have heard people speaking about how bad this looks for KPMG, but I think it just looks bad for the industry. You have PwC who had a whole year of controversy with the PwC Oscars screw-up, the taylor bean lawsuit and the MF Global lawsuit. Both the MF Global lawsuit and the taylor bean lawsuit had to be settled out of court and alleged that
EY struggled staying independent of their clients and paid for it with the SEC settlement. They also had to settle with the SEC over the audit of Weatherford. Weatherford had many issues with their SEC filings as a result of tax accounting.
Deloitte had some issues with the SEC over their audit of Monsanto. There were years of accounting errors that were overlooked by Deloitte. The SEC still has yet to take action against Deloitte for that.
This issue with KPMG seems like less of a reflection on KPMG and more of a reflection on the industry. People at the largest public accounting firms just think that they have to show up to the job and that is the only requirement of them to keep their jobs. They don’t think that they have responsibility to investors or other CPA’s at large.