Big Four firm KPMG has fired six audit personnel including four partners, one employee and the head of the audit practice in the USA, for violating the Code of Conduct, raising further questions on the cosyness of Big Four firms with regulators.
An employee formerly from the PCAOB had received confidential information following their departure, the information was on regulatory inspections and was shared with other KPMG personnel, this threatened the integrity of regulation. KPMG discovered this information in February from an internal source and reported the issue to the PCAOB and the SEC and hired an outside law firm for investigation.
The investigation found that the six KPMG employees, including five partners, had received warnings in advance of the inspection or were aware of the warnings, yet did not report the situation. The guilty personnel included Scott Marcello, vice-chair of the KPMG US audit practice.
Prem Sikka, emeritus professor of accountancy at the University of Essex, said to the Financial Times that the leak from the PCAOB was a consequence of the close links between regulators and professional services firms.
In a release KPMG was adament that this issue does not impact any of the firm’s audit opinions or any client’s financial statements. The firm named a new vice chair of audit, Frank Casal.
The PCAOB were contacted but by the time of writing had not replied. The SEC declined to comment.