- POSTED: 25 Jan 2014 04:35
US accounting firm KPMG violated rules aimed at maintaining auditors' independence from their clients and will pay $8.2 million to settle the charges, regulators said on Friday.
WASHINGTON: US accounting firm KPMG violated rules aimed at maintaining auditors' independence from their clients and will pay $8.2 million to settle the charges, regulators said on Friday.
The Securities and Exchange Commission found that KPMG broke the rules by providing prohibited non-audit services such as bookkeeping, corporate finance and expert services to affiliates of companies whose books they were auditing.
In addition, the SEC said in a statement, some KPMG personnel also owned stock in companies or affiliates of companies that were KPMG audit clients, in a further violation of the rules designed to ensure auditors maintain objectivity and impartiality in reviewing a client's books.
"KPMG compromised its role as an independent audit firm by providing prohibited non-audit services to companies that it was supposed to be auditing without any potential conflicts," John Dugan, associate director for enforcement in the SEC's Boston regional office, said in the statement.
"Auditors are vital to the integrity of financial reporting, and the mere appearance that they may be conflicted in exercising independent judgment can undermine public confidence in our markets."
According to the SEC, KPMG repeatedly represented in audit reports through the 2007-2011 period that it was "independent", despite providing services to three audit clients "that impaired KPMG's independence."
KPMG did not admit to or deny the SEC findings.
But it agreed to pay $5.3 million in disgorgement of fees received from the three clients plus interest of $1.2 million, and a $1.8 million penalty, the SEC said.
The SEC did not identify the clients.
The regulator also said the company pledged internal changes to enhance compliance with auditor independence rules and to hire an independent consultant to monitor the changes.
KPMG, in an emailed statement to AFP, said it was "fully committed" to ensuring its independence as an auditor.
"In the years since the events discussed in this SEC action, KPMG has implemented internal changes that are designed to ensure its ability to comply with restrictions on providing non-audit services to SEC audit clients and/or their affiliates," the company said.