This week Big Four accounting firm KPMG fired six US employees over a scandal that calls into question efforts to ensure that public company accounts are being properly scrutinised.
Here’s what happened: KPMG recruited an employee from the Public Company Accounting Oversight Board, which is charged with overseeing the nearly 2,000 accounting firms that audit US companies. The watchdog inspects the Big Four and other firms annually by taking a random sample of audits and checking them for deficiencies and conflicts of interest.
KPMG says that its new employee received a heads up from someone who still worked at the PCAOB about which audits would be inspected. The new employee then shared the information around. Eventually, five partners, including the head of the US audit practice, “either had improper advance warnings” or were aware that others had received this information and “failed to properly report the situation in a timely manner”, the firm said. All six people have been fired.