• Register
Return to: Home > News > Financial Results > Former KPMG executive director guilty of fraud

Former KPMG executive director guilty of fraud

Former KPMG executive director Cynthia Holder has pleaded guilty to fraud in relation to a scheme to steal confidential information from the Public Company Accounting Oversight Board (PCAOB) to improve KPMG’s PCAOB inspection results.

Holder was previously the PCAOB’s inspection leader before joining KPMG.

KPMG has fared poorly in recent years in PCAOB inspections, receiving roughly twice as many comments as its competitor firms in 2014. In 2015, the firm made efforts to improve its performance in PCAOB inspections, included hiring PCAOB personnel such as Holder and her co-conspirator Brian Sweet.

Holder, along with other KPMG employees David Middendorf, David Britt, and Thomas Whittle, worked to acquire confidential PCAOB information concerning which KPMG audits would be inspected in an effort to improve the inspection results.

After Sweet joined KPMG, but while Holder was still employed by the PCAOB, Holder passed on confidential PCAOB information about certain pending inspections to Sweet. At the time, Holder was seeking employment at KPMG.

While Holder was pursuing efforts to obtain employment at KPMG, she continued to work on KPMG inspections at the PCAOB, which is in violation of PCAOB rules.

Once securing employment at KPMG, Holder stole valuable information on her way out of the PCAOB and then passed the information on to Sweet, her new boss at KPMG.

Upon acquiring the 2016 inspection selections, Sweet, along with Middendorf, Whittle and Britt, launched a programme to ‘re-review’ the audits that had been selected. Jeffrey Wada, who was an employee of the PCAOB initially sourced this information and passed it on to Holder who in turn passed it on to Sweet.

Wada then provided the 2017 selection to Holder and also sent her his resume in effort to gain employment at KPMG.

In 2017, a KPMG partner who received early notice that their engagement was on the confidential 2017 inspection list reported the matter. KPMG’s Office of General Counsel then launched an internal investigation.

Holder and Sweet then took measures to destroy or fabricate evidence relevant to the investigation.

Holder pleaded guilty on 16 October 2018 to one count of conspiracy to defraud the United States, one count of conspiracy to commit wire fraud and two counts of wire fraud. She is due to be sentenced on April 5 2019.

Manhattan US attorney Geoffrey Berman said: “Holder undermined the work of the SEC and the PCAOB by stealing confidential inspection information from her former employer, the PCAOB, and helping insiders at her new employer, KPMG, to cheat the regulatory system put in place to protect the investing public.

“This was a revolving door tainted by fraud and today we hold the defendant accountable for her conduct.”

Top Content

    South Africa: sensing new opportunities

    It has been an interesting couple of years for the profession in South Africa. A number of high-profile scandals have brought the profession and the role of auditors into sharp public focus, brewing a distrust towards accountants and a large expectations gap. Joe Pickard reports.

    read more

    Ghana: a quest for consistency

    Ghana’s current economic profile would suggest a fertile landscape for purveyors of accounting services. But inconsistent approaches to compliance and application of standards – coupled with problems in the banking sector and consequent liquidity constraints – have created a challenging environment. Paul Golden writes.

    read more

    Drone technology: audit takes to the skies

    The movement towards a digitised era has already impacted the auditing profession in a number of ways, from blockchain to artificial intelligence. Now firms are taking to sky and using drone technology in their audits. Mishelle Thurai speaks to Big Four firms to find out more.

    read more

    SBC: a new alliance joins the market

    Jonathan Minter speaks to Paul Tutin, chair of founding firm Streets Chartered Accountants, about why the business and its European partners took the decision to launch their own association.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.