KPMG LLP, one of the big four accounting firms, will pay $50 million to settle Securities and Exchange Commission allegations that it altered past audit work after receiving stolen information from an industry watchdog.
The fine stems from an embarrassing chapter that led to five former KPMG employees being accused of interfering with inspections of the firm by the Public Company Accounting Oversight Board, an agency overseen by the SEC that is the U.S.’s main regulator of auditors. KMPG admitted wrongdoing as part of the settlement with the SEC, and agreed to hire an independent consultant to review its internal controls, according to a Monday statement.
“KPMG’s ethical failures are simply unacceptable,” SEC Chairman Jay Clayton said in the statement. “The resolution the Enforcement Division has reached holds KPMG accountable for its past failures and provides for continuing, heightened oversight to protect our markets and our investors.”
The former senior KMPG officials sought and obtained a list of inspection targets by the PCAOB because the firm had experienced a high rate of deficiencies. With the data, the former employees oversaw a program to revise certain audits to reduce the likelihood government inspectors would find shortfalls.
In an email statement, a company spokesperson said KPMG has learned important lessons and is a stronger firm because of steps taken to improve its culture, governance and compliance program.
The investigation, which also involved the Justice Department, resulted in January 2018 criminal charges against three former PCAOB officials. Federal prosecutors accused the employees, who went on to work for KPMG, of stealing information tied to PCAOB exams.
In its Monday statement, the SEC said its probe is continuing.