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Controls at KPMG?

Wednesday April 10 2013

There are more reports on the KPMG Los Angeles partner resignation in the news. As one client asks, what controls does KPMG have in place to prevent a 'rogue' employee from peddling inside information. 

I published a Business Case Study on KPMG's Tax Shelter Fine. The fact that there are recurring problems at KPMG after they paid the biggest criminal fine in history with out a trial raises questions about their internal controls. 

The Heard on the Street column in today's WSJ discusses the idea of actually signing reports with the personal name of the  audit partner. The UK actually requires this. The idea is that knowing who is in charge will lead to more responsibility. 

External accounting firms are held to a high standard of trust. Now that the number of Big Firms has narrowed from eight to four, the business can ill afford another incident that might implode a firm ala Arthur Andersen. This bears watching. 

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One response to “Controls at KPMG?”

  1. cary kingsley Avatar
    cary kingsley

    Ok there are several issues that must be acknowledged before even looking at “controls”
    1: what is the point? After AA beat the guilty charge on appeal the DOJ has chosen to use fines instead of criminal charges (after all having a gov agency responsible for the loss of 10,000 jobs in less then a day is kinda tough on the current administrations when they are wrong) so with just fines (which are tax deductible along with lawyer fees)
    2: Following their “Biggest Fine” KPMG as part of the fine promised “Controls” with federal agents supervising these “controls” so that begs the question if “controls’ don’t work now why would they work in the future.
    3: Till people are personally held accountable (legally) there is no point to implementing “controls” now guess what should you make people personally responsible you just invalidated every corporation and llc and llp created. The reason these entities exist is to shield decision makers from legal responsibility.
    So to put a point on it, it just won’t make a difference. BTW I hear KMPG pays real good to sponsor golfers and tournaments.

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