CFO
Menu
  • Accounting & Tax
  • Banking & Capital Markets
  • Growth Companies
  • Human Capital & Careers
  • Risk & Compliance
  • Strategy
  • Technology
  • Sign InSign Up
CFO
  • Conferences
  • Webcasts
  • Research
  • White Papers
  • Jobs
  • Training
  • Newsletters
  • Magazine
CFO
Companies Are Worried About Employee Retention, But Don’t Plan to Raise Pay
A study from PayScale found companies are hoping…
CEO Pay Ratio Rule Is ‘Disclosure by Soundbite’
New academic analysis pulls no punches, calling…
Luring Private Equity to Your Divestment Deal
Private equity bidders can accelerate a deal's…
  • Accounting & Tax
  • Banking & Capital Markets
  • Risk & Compliance
  • Human Capital & Careers
  • Growth Companies
  • Strategy
  • Technology
Auditing

Six CPAs Accused of Rigging Audit Inspections

The SEC says PCAOB staffers leaked confidential materials to KPMG partners to boost the firm's inspection results.

Matthew Heller
January 23, 2018 | CFO.com | US - Comments: 1
share
Tweet
Print

Email this article

In a major jolt to the Public Company Accounting Oversight Board, three former staff accountants have been accused of leaking confidential information to KPMG partners so the firm could perform better on inspections of its audits.

The U.S. Securities and Exchange Commission said the information disclosed by the three — Brian Sweet, Cynthia Holder, and Jeffrey Wada — included the KPMG audit engagements that the PCAOB planned to inspect, the criteria the board used to select engagements for inspection, and the focus areas of the inspections.

Recommended Stories:
  • Accounting Watchdog Finds Ongoing Problems at KPMG
  • SOX 404(b) Provides Investor Value After All
  • Rate of Growth in Audit Fees Doubled in 2017: FERF

“This was valuable information to KPMG, which had experienced a high rate of audit deficiency findings and had made a priority of improving its PCAOB inspection results,” the SEC noted in an administrative order.

Both Sweet and Holder left the PCAOB in 2015 for jobs at KPMG. Sweet’s supervisors at the firm, David Middendorf and Thomas Whittle, along with another partner in that office, David Britt, have also been charged in the case.

“As alleged, these [defendants] engaged in shocking misconduct — literally stealing the exam — in an effort to interfere with the PCAOB’s ability to detect audit deficiencies at KPMG,” Steven Peikin, co-director of the SEC’s Enforcement Division, said in a news release.

“The PCAOB inspections program is meant to assess whether firms are cutting corners, compromising their independence, or otherwise falling short in their responsibilities,” he added. “The SEC cannot tolerate any scheme to subvert that important process.”

The scheme allegedly began in April 2015 when Sweet allegedly downloaded confidential and sensitive PCAOB inspection-related materials that he believed might help him in his new job at KPMG. According to the SEC, the firm had recruited him at a time when it had a high rate of audit deficiencies — nearly half the audits inspected in 2013 were found deficient.

Sweet allegedly continued to gain access to confidential PCAOB information from Holder and, after she joined KPMG, from Wada.

“After Wada sent Holder the list of the PCAOB’s planned inspections for 2016, Middendorf, Whittle, Britt, Sweet, and Holder undertook an effort to analyze and review audit workpapers and to suggest revisions to them to avoid possible findings of deficiencies by the PCAOB,” the SEC alleged.

The six defendants have either resigned or were fired by the PCAOB and KPMG. They are also facing parallel criminal charges.

Sweet has agreed to a settlement with the SEC that bars him from appearing or practicing before the commission as an accountant.

Post navigation

← Sanofi Buys Hemophilia Drug Maker for $11B
Brand Value Drives Corporate Value →

One response to “Six CPAs Accused of Rigging Audit Inspections”

  1. Marjorie A. Marinovic CPA, MAcc said 01/23/18 17:28pm

    I use the articles I find in this publication in my Ethics for Accountants the Masters of Accountancy program here at the University of Texas at El Paso. I would like all of my students to use this publication. I think it is a very valuable teaching tool!

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Advertisement

Popular Articles

  1. Mismatch: Finance Roles’ Importance vs. Performance
  2. SEC Accuses Four Firms of ICFR Deficiencies
  3. Tesla CFO Ahuja’s Retirement Stuns Wall St
  4. DHS Announces Changes To H-1B System
  5. ASC 606: Trips, Traps, and Troubleshooting
Advertisement
 

Topics

  • Accounting & Tax
  • Banking & Capital Markets
  • Human Capital & Careers
  • Growth Companies
  • Risk & Compliance
  • Strategy
  • Technology

Media

  • Videos
  • Whitepapers
  • Research
  • Magazine

Events

  • Conferences
  • Argyle Events
  • Webcasts

Services

  • Reprints
  • Back Issues
  • Mobile
  • Widgets
  • RSS

About CFO

  • About CFO
  • Editorial Staff
  • Press
  • Advertise
  • Contact Us

Want the Magazine?

Relax and unplug with our award-winning coverage.

Subscribe Now
Follow Us