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California Takes KPMG to Task Over Admissions of Cheating

  • California AG Xavier Becerra and the California Board of Accountancy (“CBA”) reached a settlement with multinational accounting firm KPMG LLP over its admission to being disciplined by the U.S. Securities and Exchange Commission (“SEC”) for misusing confidential information from the Public Company Accounting Oversight Board (“PCAOB”) to improve its PCAOB inspection results, and admitting that many of its certified public accountants (CPA) cheated on internal continuing education exams in violation of the Accountancy Act.
  • According to the AG’s office, the matter arose from KPMG’s admission that it was disciplined by the SEC over its improper access and use of PCAOB’s information and its CPAs’ cheating. KPMG allegedly accessed PCAOB’s information after it had received a high number of deficiency findings in PCAOB’s inspection of its public company audits.
  • Under the terms of the settlement and disciplinary order, among other things, KPMG will pay a $1.3 million administrative penalty as well as enforcement costs to the CBA, and will be subject to a 30-day license suspension, which will be stayed during a three-year probation.