KPMG must pay $50 million after the Securities and Exchange Commission charged the accounting giant with cheating on training exams and using purloined information concerning audit inspections to be conducted by the Public Company Accounting Oversight Board (PCAOB). KPMG agreed to the $50 million penalty and also accepted a public censure as part of the settlement.
The findings in the SEC’s cease-and-desist order—which KPMG has admitted—are that now-former members of KPMG’s Audit Quality and Professional Practice Group improperly obtained lists of particular audit engagements that the PCAOB planned to inspect. KPMG obtained the confidential information from multiple individuals who had worked in the PCAOB’s inspections group, some of whom joined KPMG after leaving the PCAOB. KPMG personnel then used the information to revise audit work papers to minimize the chances that the PCAOB’s inspections would turn up deficiencies. These misdeeds resulted in a substantial improvement to KPMG’s 2016 inspection results. The SEC charged six accountants individually, including these former KPMG personnel, in January 2018 for this conduct.