September 21, 2018

Reminder: KPMG Fired a Bunch of People for Mishandling PCAOB Inspections Details They Weren’t Supposed to Have

kpmg auditors pcaob partners conspiracy

KPMG released its global revenue results today and its the standard self-congratulatory Big 4 flimflam that we love to hate around here.

The Wall Street Journal and Financial Times both covered the results in earnest; the Journal noted that KPMG’s growth lagged its BIG peers, while the FT mentioned a couple of the firm’s “huge reputational challenges,” namely its role in South Africa’s massive graft scandal and some of the U.K. audit regulator’s criticism.

But somehow the FT overlooked KPMG’s ginormousest reputational challenge of all — six employees, including two of its audit leaders and five partners in total, fired for mishandling confidential PCAOB inspection details.

Man, remember that? No offense to the FT, necessarily; it’s easy to forget a transgression by a Big 4 firm here and there over the course of the year. There’s always a lot to remember!

Anyway, wanted to make sure that we didn’t omit that one. It was a doozy. As you were.

[WSJ, FT, @retheauditors]

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SHOCKER: Number of Fraud Cases in the Courts is High

In probably the most shocking news of the day, KPMG’s “fraud barometer” reports that the number of fraud cases in UK courts in the first six months of the year are the highest since the firm started issuing the report, 21 years ago.
Here in the states, the big sexy fraud gets all the attention but there is plenty of small fraud to go around. Plus, the bright side is, we’ve haven’t seen anything yet:

“These figures are bad, but the worst is yet to come,” Hitesh Patel, a partner at KPMG, said. “It will be a number of years before the impact of the recession fully feeds through into the fraud statistics.”

So our advice would be for any of you that are nervous about layoffs, look into getting transferred to the forensic accounting practice. You won’t be out of work any time soon.
Record total of fraud cases in court – and worse to come [FT.com]

Ernst & Young Is Here to Help (For a Small Fee)!

ernst_young.jpgWe thought that Ernst & Young was advising the New York Fed on the winding down of AIG out of the goodness of their hearts but it turns out it’s actually about the money.
E&Y could make as much as $60 million advising the New York Fed, which is 50% more than the initial agreement, according to Bloomberg. The NYF is also reimbursing E&Y for expenses, up to 10% of the professional fees. This occurs after the parties had initially said $40 million would be the cap but $60 mil is it, we swear, no more.
And because E&Y is solid like that, the firm is billing out partners and directors at discounted rates ($775/hour). I mean, ’cause, let’s face it, this thing’s a mess and E&Y is going to be working hard, working late, working weekends.
Ernst & Young’s Maximum Pay for AIG Advice Swells [Bloomberg]