October 1, 2022

Report: Court Documents Name KPMG Audit Clients Caught Up in PCAOB Leak Fiasco

MarketWatch reporter and friend of Going Concern’s, Francine McKenna, wrote an outstanding article today after digging through court documents obtained by MarketWatch that name the audit clients caught up in the KPMG audit inspection conspiracy. And there are some pretty big names.

The Justice Department in January brought criminal charges against five former KPMG executives and one former employee of the Public Company Accounting Oversight Board for their roles in the scandal, in which confidential PCAOB audit inspection details were leaked ahead of time to the firm.

McKenna wrote:

Court filings made June 8 by lawyers for two of the KPMG partner defendants spells out the audit clients caught up in the scandal. They’re mostly financial companies: Citigroup, Credit Suisse, Deutsche Bank, Banc of California, BBVA, Ambac, Phoenix Life, and NewStar Financial as well as industrial companies Air Products & Chemical and C&J Energy Services.

Neither the Justice Department nor the Securities and Exchange Commission, who filed similar charges in a civil cases, have ever identified the KPMG clients.

But McKenna stressed that “there’s no indication that any of these banks or companies were aware of the tip off, and typically, they would have little to no involvement in auditor inspections. None of the issuers have announced a restatement of financials since the Jan. 6 indictment. KPMG, the auditor, has not been accused of wrongdoing.”

The banks and companies named in the court documents either declined to comment or did not respond to an email request for comment, McKenna wrote.

The new court filing also reveals that KPMG employees would have received financial bonuses if their engagements received no comments from PCAOB inspectors, according to McKenna.

[MW]

Image: iStock/justhavealook

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