Last fall, we reported that KPMG had issued an internal preservation notice to its employees in regards to "General Electric's Loan Staff Arrangements." As you may remember, this arrangement consisted of KPMG employees being loaned to GE to help supplement the work of the world's best tax law firm. Oh, and KPMG is the auditor for GE. Last year, Francine McKenna reported that this sketchy arrangement included KPMG employees, "having GE email addresses, are supervised by GE managers – there is no KPMG manager or partner on premises – and have access to GE employee facilities." In short, she wrote, "KPMG should know better" than try to pull this type of stunt on the PCAOB.
This morning, McKenna reports on the latest development on this little arrangement:
KPMG will no longer loan tax professionals to GE during busy season, according to a source close to the situation. KPMG was billing an extra $8-10 million, over and above the audit each year, for the service. It looks like a regulator got to both KPMG and GE, but quietly. I doubt we’ll ever see a public sanction or fine from the PCAOB or the SEC for KPMG.