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January 24, 2014 at 08:31 AM
KPMG agreed Friday to pay $8.2 million to settle charges by the Securities and Exchange Commission that the public accounting firm violated rules that require auditors to remain independent from the public companies they’re auditing and to ensure they maintain their objectivity and impartiality.
The SEC issued a separate report the same day about the scope of the independence rules, cautioning audit firms that they’re not permitted to loan their staffers to audit clients in a manner that results in the staff acting as employees of those companies.
An SEC investigation found that KPMG broke auditor independence rules by providing prohibited non-audit services such as bookkeeping and expert services to affiliates of companies whose books they were auditing. Some KPMG personnel also owned stock in companies or affiliates of companies that were KPMG audit clients, further violating auditor independence rules.
“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,” said John T. Dugan, associate director for enforcement in the SEC’s Boston Regional Office, in a statement. “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.”
The violations occurred at various times from 2007 to 2011.
