KPMG Case II

Abstract

This study was written with the purposes of following up on the case of KPMG Limited International and the incidents published in 2020 under the title “Illegal Use of PCAOB Data and Cheating in Training Exams” and of reviewing the second incident of cheating at the KPMG Australia office. In the first case, KPMG had illegally obtained confidential data and checklists from the Public Company Accounting Oversight Board (PCAOB) for surveillance activities and profited off of them between 2015-2017. At around the same time, KPMG also cheated on the educational exams administered to auditors from the U.S. Securities and Exchange Commission (SEC). The judicial and administrative investigations of those involved in the irregularities began in 2020. The public was shaken by a second exam scandal in 2021 as these investigations were still ongoing. In this regard, this study evaluates the motivation behind KPMG’s continued irregularities and the sanctions imposed regarding the resulting investigations through the official statements of regulatory bodies such as the SEC and PCAOB.

Keywords

• PCAOB
• KPMG
• Audit Firm’s Cases

KPMG Vak’ası II

Abstract

Bu çalışma 2020 yılında “KPMG Vak’ası: PCAOB Verilerinin Yasadışı Kullanımı ve Eğitim Sınavlarında Hile Yapılması” başlığı ile yayınlanmış olan olayların takibi ve KPMG Avustralya ofisinde gerçekleşen ikinci kopya olayının incelenmesi amacıyla kaleme alınmıştır. Söz konusu ilk vak’ada, KPMG 2015-2017 yılları arasında PCAOB’un gizli verileri ve gözetim faaliyetleri ile ilgili kontrol listelerini yasadışı yollarla edinerek çıkar amaçlı kullanılmıştır. İkinci olarak aynı yıllarda SEC’in denetim meslek mensuplarına uyguladığı eğitim sınavlarında KPMG’nin hile yaptığı ortaya çıkmıştır. 2020 yılı itibari ile anılan usulsüzlüklerde rol oynadığı tespit edilen kişilerin adli ve/veya idari soruşturmaları halen devam ederken, 2021 yılında ikinci bir sınav skandalı daha kamuoyuna duyurulmuştur. Bu kapsamda bu çalışmada hem KPMG’nin devam edegelen usulsüz eylemlerinin arkasındaki motivasyonun değerlendirilmiş hem de sonuçlanan soruşturmalarda uygulanan yaptırımlar SEC ve PCAOB gibi düzenleyici kuruluşların resmî açıklamaları üzerinden değerlendirilmiştir. 

Keywords

• PCAOB
• KPMG
• Denetim Firması Vak’aları

References

1. ACFE (2012). Report to the nations on occupationalfraud and abuse, globalfraud study. Retrievedfrom www.acfe.com> media> files> acfe> pdfs google scholar
2. Agnew H. & Ahmed, M. (2016). KPMG Switzerland resigns as FIFA auditor: Move comes as football governing body undergoes corruption probes. Retrieved from www.financialtimes.com, google scholar
3. Ahmed, A. (2020). KPMG India cheating scandal 2020: Director nitesh jain exposed. Retrieved from https://medium.com/@abu137/ kpmg-india-cheating-scandal-2020-director- nitesh-jain-exposed-2a745327d44. google scholar
4. Albrecht, W. S . & Albrecht , C.O. (2004). Fraud examination and prevention. Mason: South-Western. google scholar
5. BBC News, (2018). Audit watchdog chief to step down. Retrieved from https://www.bbc.com/news/business-46069722 google scholar
6. Bozkurt, N. (2009). İşletmelerin kara deliği hile: Çalışan hileleri. İstanbul: Alfa Yayınları. google scholar
7. Bramwell, J. (2019). Ex-KPMG executive director who was major player in PCAOB cheating scandal sentenced to eight months in jail. Retrieved from https://goingconcern.com/ex- kpmg-executive-directo r-who-was-major-player-in-pcaob- cheatings candal-sentenced-to-eight-months-in -jail/. google scholar
8. Brasseur, K. (2019). Ex-PCAOB leader gets prison time for role central to KPMG scandal. Retrieved from https://www.complianceweek. com/accounting-and-auditing/ex-pcaob- leader-gets-prison-time-for-role-central-to-kpmg-scandal/27877.article. google scholar

9. Buckhoff, T.A. (1999). Fraud examination in academia: Higher education should help stave offfraud and abuse. Retrieved from https:// www.fraud-magazine.com/article.aspx? id=4294968479. google scholar
10. Cullinan, C. P. & Sutton, S. G. (2002). Defrauding the public interest: A critical examination of reengineered audit processes and the likelihood of detecting fraud. Critical Perspectives on Accounting, 13, 297-310. google scholar
11. Francine, McK. (2019). An SEC fine for KPMG in the PCAOB data theft scandal and another horrible revelation. Retrieved from http:// retheauditors.com/2019/06/26/what-are-the- chances-of-a-significant-sanction-or-fine-for-kpmg. google scholar
12. Gaetano, C. (2019). FormerKPMG managingpartner sentenced to ayear and a day inprisonforPCAOB cheating scandal. Retrieved from https://www.nysscpa. org/news/publications/the-trusted-professional/article/ former- kpmg-partner-sentenced- to-a-year-and-a-day-in-prison-for-pcaob-cheating-scandal-091219. google scholar
13. Henderson, R. (2019). KPMG South Africa makes headway rebuilding image after scandals. Retrieved from https://www. accountingtoday. com/articles/kpmg-south-africa-makes- headway-rebuilding-image-after-scandals. google scholar
14. Ho, S. (2022). To send a message, PCAOB fines former KPMG vice chair $100,000 for ınspection cheating scandal. Retrieved from https:// tax.thomsonreuters.com/news/to-send-a- message-pcaob-fines-former-kpmg-vice-chair-100000-for-inspection-cheating-scandal/. google scholar
15. Kilby, P. (2022). fraudsters, fakes and flaws: The psychological insights of Alex Gibney’s films. Retrieved from https://www.fraud-magazine.com/article.aspx?id=4295017580. google scholar
16. Maurer, M. (2022). Fired KPMG audit head fined over failure to supervise senior auditors.Retrieved from https://www-wsj-com.translate. goog/articles/fired-kpmg-audit-head- fined-over-failure-to-supervise-senior-auditors-11649193583?_x_tr_sl=auto&_x_tr_tl=tr&_x_tr_hl=tr. google scholar
17. McKenna, F. (2020). Corruption in the auditor ınspection process: The case of KPMG and the PCAOB. Retrieved from https://thedig. substack.com/p/our-teaching-case-on- kpmgpcaob-scandal?s=r. google scholar
18. Miller, H. (2020). KPMG reprimanded, again, and fined $560,000 for audit failings. Retrieved from https://www.bloomberg. com/news/ articles/2020-04-02/kpmg-reprimanded- again-and-fined-560-000-for-audit-failings. google scholar
19. PCAOB (2018-2020). Report on inspection of KPMG LLP. Retrieved from https://pcaobus.org/oversight/inspections/ firminspectionreports? searchWithin=kpmg&effectivedateyear=2018%2C2019%2C2020%2C2021%2C2022&isinternational=U.S. google scholar
20. PCAOB, 2021-105. (2021). Order instituting disciplinary proceedings, making findings and imposing sanctions. Retrieved from https:// pcaob-assets.azureedge.net/pcaob- dev/docs/default-source/enforcement/decisions/documents/105-2021-008-kpmg-australia. pdf?sfvrsn=81a97edf_6. google scholar
21. PCAOB (2022). PCAOB sanctions former KPMG vice chair of audit for failure reasonably to supervise, imposing largest individual penalty ever in a settled proceeding. Retrieved from https://pcaobus.org/news-events/news-releases/news-release-detail/ pcaob-sanctions- former-kpmg-vice-chair-of-audit-for-failure-reasonably-to-supervise-imposing- largest-individual-penalty-ever-in-a-settled-proceeding. google scholar
22. Rathnunga, J. (2021). Why Australia’s regulators are powerless in KPMG exam cheating scandal. Retrieved from https://cmaaustralia. edu.au/why-australias-regulators-are- powerless-in-kpmg-exam-cheating-scandal/. google scholar
23. Schmalleger, F. (1991). Criminal justice ethics: Annotated bibliography and guide to sources. google scholar
24. SEC, 2003-16. (2003). SEC charges KPMG and four KPMG partners with fraud in connection with audits of xerox; SEC seeks injunction, disgorgement and penalties. Retrieved from https://www.sec.gov/news/press/2003-16.htm. google scholar
25. SEC, 2014-12. (2014). SEC charges KPMG with violating auditor independence rules. Retrieved from https://www.sec.gov/news/ press-release/2014-12. google scholar
26. SEC, 2020-115. (2020). SEC charges three former KPMG audit partners for exam sharing misconduct. Retrieved from https://www.sec. gov/news/press-release/2020-115. google scholar
27. SEC 2021-32. (2021). SEC charges two former KPMG auditors for ımproper professional conduct during audit of not-for-profit college. Retrieved from https://www.sec.gov/news/press-release/2021-32. google scholar
28. Silverstein, S. (2019). KPMG’s ethics crisis- and the lesson it teaches leaders about accountabilitty. Retrieved from https://samsilverstein. com/kpmgs-ethics-crisis-and-the-lesson- it-teaches-leaders-about-accountability. google scholar
29. Singleton, T.W. & Singleton, A. J. (2010). Fraud auditing and forensic accounting. 4th Edition, ISBN: 978-0-470-56413-4. google scholar
30. Sutherland, E. H. and Cressey, D.R. (1960). Principles of criminology. Philadelphia: Lippincott . google scholar
31. Szajna-Hopgood, A. (2020). Calls for watchdog to review KPMG’s £58m Ted Baker accounting scandal. Retrieved from https://www. retailgazette.co.uk/blog/2020/02/calls-for- watchdog-to-review-kpmgs-53m-ted-baker-accounting-scandal/. google scholar
32. Topçu, G. (2019). Impact of accountıng informatıon systems (AIS) on fraud detection. Management and Political Sciences Review, 1(1), 81-92. google scholar
33. Warren E. & Markey E.J. (2017). Letter on KPMG’s role and findings as the ındependent auditor of wells fargo’s financial statements from 2011-2015. Retrieved from https://www.warren.senate.gov/files/documents/2017_04_25_Letter_%20to_PCAOB.pdf. google scholar
34. Whitehouse, T. (2019). KPMG fallout: Cheating allegations raise new questions. Retrieved from https://www.complianceweek. com/ accounting-and-auditing/kpmg-fallout- cheating-allegations-raise-new-questions/27281.article google scholar
35. Yalçın, N. (2020). KPMG Vak’ası: PCAOB Verilerinin Yasadışı Kullanımı ve Eğitim Sınavlarında Hile Yapılması. Muhasebe Enstitü Dergisi, 2020 (63). google scholar