News has come out from KPMG Australia that the majority of their employees accepted the pay cut. KPMG announced pay cuts of 20 percent recently, but they said that the pay cut was voluntary. However, it seems that peer pressure has worked as 99% of employees have agreed to take the pay cut.
KPMG Australia is allowing some of their workforce to return to work in phased percentages. Right now they are allowing 15 percent of the workforce to return to work.
KPMG partners were accused of cheating on internal exams. The three partners were Timothy Daly, Michael Bellach and John Donovan.
These partners no longer work for KPMG, but they are suspended for practicing in front of the SEC.
KPMG was previously fined $50 million for cheating on internal tests which opened them up for further inspection. The investigation was both internal and from the SEC. The partners in question were texting each other answers to the questions. Once they realized the firm was looking into this type of behavior, the partners deleted the texts hoping that no one would notice.
Upon further inspections it appears that cheating is still going on at KPMG. KPMG seems to have a serious ethics problem. If you remember a couple of years ago, they had partners that gave them a heads up about a PCAOB inspection. Then they changed workpapers to look better for the inspection. As a result of that, they had to fire a lot of their core audit leadership team.
What’s so bad about cheating on these tests. The reason these tests exist is so that partners stay up to date on the latest accounting principles. If they are up to date, then hopefully they can competently audit their clients. If they aren’t up to date, then the public can’t trust what they say about a public company’s financials. This just shows how bad the culture can be at the big 4. People are so busy that they cut corners. In my experience, this happens a lot because people don’t have enough time to take internal tests and meet cpe requirements. Partners also have a mentality that they are above performing certain tasks and are used to delegating everything. They can get away with this behavior until regulators step in and punish them. Partners rarely punish each other, but problems are exposed once regulators step in.
KPMG stated that they are a strengthening their culture, governance and compliance programs as a result of the SEC investigations.