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In KPMG Australia Cheating Scandal, Apparently Cheaters *Do* Win

Posted on by Jason Bramwell

From Australian Financial Review:

Chartered Accountants ANZ has belatedly ruled that only 12 of the 422 members from big four consulting firm KPMG who took part in systemic exam cheating will be put through the professional body’s individual disciplinary process.

The body’s disciplinary committee ruled that the “activities undertaken” by 410 KPMG CA ANZ members involved in the cheating “did not meet the threshold for further action under the Code of Ethics and CA ANZ by-laws”, and the sanctions and remedial actions already applied by KPMG Australia were “sufficient”.

The wrongdoing, which involved KPMG partners and staff cheating on courses that covered independence, audit and accounting rules, continued for at least five years until early 2020 and involved 18 partners and more than 1100 staff at the firm.

The US audit watchdog, the Public Company Accounting Oversight Board (PCAOB), issued a detailed report last September outlining the extent of the cheating, and fined the firm $US450,000 ($608,600) over the behaviour.

Chartered Accountants may only discipline 12 of 422 KPMG cheaters [Australian Financial Review]

Related article:

KPMG Australia Audit Partners and Staff Didn’t Get Away with Cheating on Internal Training Exams Either

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KPMG previously informed the Company’s Audit Committee of certain concerns arising during its incomplete audits of the Company’s consolidated financial statements as of and for the year ended December 31, 2010, and the effectiveness of internal control over financial reporting as of December 31, 2010. These concerns included serious discrepancies and unexplained issues relating to, among others: (i) the Company’s bank balances; (ii) transactions with major suppliers; (iii) VAT invoices and payments; (iv) sales and payments for sales by third parties; (v) sales to the Company’s second largest customer; (vi) discrepancies between KPMG’s direct calls to customers and confirmations returned by mail; and (vii) concerns raised by directly confirming customer sales and accounts receivables.

In a letter dated April 19, 2011, KPMG informed the board of directors of the Company that in KPMG’s view the Company’s senior management has not taken, and the board of directors has not caused senior management to take, timely and appropriate remedial actions with respect to these discrepancies and/or issues, and KPMG stated that the continued lack of resolution of the issues would materially impact the financial statements for the year ended December 31, 2010 and possibly prior periods.

And as you might expect, this resulted in KPMG taking its audit reports and going home:

On April 29, 2011, we were also informed by KPMG, our former independent accounting firm, that disclosures should be made and action should be taken to prevent future reliance on their previously issued audit reports related to the consolidated balance sheets of ShengdaTech, Inc. and its subsidiaries as of December 31, 2008 and 2009, and the related consolidated statements of income, shareholders’ equity and comprehensive income, and cash flows for the years then ended and the effectiveness of internal control over financial reporting as of December 31, 2008 and 2009.

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One thought on “In KPMG Australia Cheating Scandal, Apparently Cheaters *Do* Win”

  1. Should get the push. Breaches number one rule as an Auditor, that of integrity.

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