KPMG Adds Retired Four-Star Air Force General to Its One-Star Board of Directors

No, it wasn’t Pope Francis, Malala Yousafzai, or the ghost of Nelson Mandela, as Caleb suggested last April, but KPMG U.S. on Oct. 4 appointed retired Air Force General Janet Wolfenbarger as the firm’s first independent director to its board, nearly nine months after five former KPMG executives were indicted for their roles in an embarrassing accounting scandal that happened under the board’s and Chairman and CEO Lynne Doughtie’s watch.

Retired Gen. Janet Wolfenbarger

KPMG said additional independent directors will be named in the coming months.

In a press release, KPMG said Wolfenbarger brings to the board “the highest degree of integrity, respect and service,” and boy, does KPMG and its board need that:

Having retired in 2015, after 35 years as a decorated and respected military officer, Janet is the United States Air Force’s first four-star female general. Prior to her retirement, she was inducted into the Order of the Sword, which, according to an Air Force news release is “the highest honor the enlisted force can bestow upon an individual for their conspicuous and significant contributions to the welfare and prestige of the enlisted force, to mission effectiveness, and to the overall military establishment.” With an extremely impressive background, Janet brings unique insights on management, leadership and the uses of technology and innovative solutions that will diversify KPMG’s current Board conversations and perspectives.

We knew this was coming. In a long, fluffy, “KPMG is awesome” article published by Accounting Today last May, Doughtie wrote that the firm is “embarking on the important process of adding outside directors to our board.” Why?

In 2017, certain events, and the actions of a few former colleagues, caused us to take a deeper dive into examining our culture and values, and to assess with fresh eyes how we could improve and best position our more than 100 year-old firm for future success. What has emerged from that ongoing exercise is not surprising. We have been reminded of the cardinal rule in our business, namely that trust is paramount and, as such, must inform all that we do.

Yeah, a massive scandal that made a mockery of your firm will cause you to, I don’t know, do whatever it takes to make sure it never happens again.

Five former KPMG executives were indicted in late January on fraud and conspiracy charges for allegedly obtaining leaked information from Public Company Accounting Oversight Board inspectors—two of whom KPMG actually wound up hiring—to help improve the firm’s dismal inspection results.

The cheating scandal went down from about May 2015 until February 2017 when KPMG finally caught wind that this was going on.

Former PCAOB inspector Jeffrey Wada, who wanted a job at KPMG, and Cynthia Holder, who inspected KPMG for the PCAOB before joining the firm as an executive director, were each indicted on charges of conspiracy to defraud, conspiracy to commit wire fraud, and two counts of wire fraud.

Three former KPMG executives—David Middendorf, national managing partner for audit quality and professional practice; Thomas Whittle, national partner-in-charge for inspections; and David Britt, co-leader of KPMG’s Banking and Capital Markets Group—face similar conspiracy charges as Holder and Wada, as well as three counts of wire fraud.

A sixth participant in the alleged scheme, Brian Sweet, a former PCAOB associate director and former partner at KPMG, pled guilty to conspiracy and wire fraud charges shortly after he was arrested in January.

Because this complete embarrassment and public relations nightmare happened under Doughtie’s and the board’s noses, some action had to be taken. She wrote:

With this public responsibility in mind, we continue to take a hard look at our firm and its governance — and its deep connection to fostering and maintaining trust and effective enterprise risk management — and believe that not everything that has worked for the past 100 years will continue to work for the next 100. We will have to do some things differently and, among other actions, believe that our governance will benefit immensely from the addition of outside directors to our board.

Having a proven leader like Wolfenbarger on KPMG’s board will only help improve the firm’s tarnished reputation, because the KPMG brand—both in the U.S. and around the world—is a hot mess right now.

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