US watchdog fines former KPMG audit boss $100,000 over tip-off scandal

The former head of KPMG’s audit in the US was fined $ 100,000 and censored by the country’s accounting watchdog for failing to monitor colleagues who received illegal tips in an attempt to improve the company’s results in regulatory checks.

Scott Marcello Potter As KPMG’s Deputy Chairman of Audit in 2017, after the Big Four professional services company revealed that some of its staff had received an early warning of incorrect reviews that the watchdog had planned to inspect.

The regulators found that KPMG’s accountants used the information to “improve” the audit documents in an effort to improve the firm’s scores on tests.

Five other KPMG partners and employees were also fired over the affair, including David Midendorf, the former head of its professional practice department, who was later sentenced to a year and a day in prison for his part in the program.

Midendorf reported directly to Marcello, the Public Company Accounting Supervisory Board said. Some of his former colleagues have been charged or pleaded guilty to U.S. criminal charges.

The regulator said on Tuesday that the fine imposed on Marcelo was the largest financial penalty ever given as part of a settlement with a private individual.

Marcelo’s first case is the first case in which the council imposed sanctions on an accountant for improperly supervising colleagues who violated professional standards or accounting rules, using powers under U.S. Sarbanes-Oxley law. Marcello did not admit or deny his findings Of the Accountant’s Watchdog.

“Tuesday’s disciplinary move proves that the PCAOB is committed to imposing sanctions on top-level individuals in the largest companies when they do not take adequate oversight measures aimed at preventing violations on the part of their subordinates,” said Erica Williams, PCAOB chairman.

It was important to hold Marcelo accountable as supervisor of criminals “for their contribution to the culture that led to this serious conduct,” she said.

The Marcello settlement is the last significant enforcement action by the PCAOB since the upheaval last year. The board was Criticism has been leveled at the fact that she has become toothless Under the Trump administration, which considered abolishing it.

The test leaks caused damage not only to KPMG but to PCAOB, as the tips were passed between 2015 and 2017 after the accounting firm hired staff from the watchdog. Some were directly involved in the injustice.

Jeffrey Wada, a former PCAOB inspector, was sentenced to nine months in prison in 2019 for giving prior notice of audit tests to KPMG.

In 2019, KPMG reached a $ 50 million settlement with the Securities Authority Charges Which included a change in audit work passed after receiving the information stolen from the PCAOB.

The senior staff involved in the program searched and used the information because KPMG “experienced a high rate of audit findings in previous tests, and improvement has become a priority,” the SEC found.

KPMG said it is “a stronger firm as a result of the actions taken since 2017 to strengthen our culture, our governance and our compliance program”.

“Integrity and quality are of the utmost importance for KPMG, including acting with utmost consideration for the critical importance of the regulatory process to our profession,” it said.

US watchdog fines former KPMG audit boss $100,000 over tip-off scandal Source link US watchdog fines former KPMG audit boss $100,000 over tip-off scandal

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