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September 17, 2012

PCAOB finds fault with twelve of 52 KPMG US audits

The US Public Company Accounting Oversight
Board (PCAOB) has reported deficiencies that it considers “audit
failures” in twelve KPMG US audits inspected in 2011.

The PCAOB conducted its inspection of 52
audits by KPMG US and one audit in which the firm played a role but
was not the principal auditor. These involved field work at 31 of
KPMG’s US practice offices as well as its national office.

Issues cited by the PCAOB included failing to
identify or address financial statement misstatements and failuring
to perform necessary audit procedures. The PCAOB noted in some
reviews that follow-up between the firm and the issuer led the
issuer to change their accounting or disclosure practices.

In the dozen cases highlighted by the board,
it was concerned that KPMG US had failed to obtain the necessary
evidence on which to base its audit opinion.

A large part of the board’s findings remain
non-public to allow the firm to address any identified issues.

In a letter of response to the published
portion of the report, James Liddy, KPMG US vice-chair for audit,
said: “We conducted a thorough evaluation of the matters identified
in the draft report and addressed the engagement-specific findings
in a manner consistent with PCAOB auditing standards and KPMG
policies and procedures.”

 

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