KPMG's US arm is potentially facing a bill of up to $50m to settle civil claims arising from leaked access to confidential Public Company Accounting Oversight Board (PCAOB) lists and documents. The Wall Street Journal reports that the US arm of KPMG is likely to be looking at the highest fine ever imposed on an auditor by the Securities & Exchange Commission.
KPMG already holds the dubious distinction of receiving the highest fine so far levied against an auditor, $22.5m; imposed on the firm in 2005 regarding misleading financial statements by Xerox.
The civil penalty KPMG now faces follows on from the outcome of criminal cases involving individuals at KPMG and the PCAOB. In March 2019 KPMG’s national managing partner for audit quality David Middendorf and Jeffrey Wada, a former employee of the PCAOB were convicted of wire fraud charges in connection with a scheme to defraud the PCAOB by obtaining, disseminating, and using confidential lists of which KPMG audits the PCAOB would be reviewing.
Former KPMG executive director – Cynthia Holder – had already pleaded guilty to fraud in relation to this scheme in October 2018. Holder was a PCAOB inspection leader before joining KPMG.
The Wall Street Journal says final details of the civil settlement are still being worked out and will be likely to include the appointment to KPMG of an independent compliance consultant but the firm is not expected to be barred from audit activities.