The corruption scandal at FIFA is raising questions about the oversight of KPMG, the auditor for worldwide soccer’s governing body.

MarketWatch reports that KPMG was not only responsible for auditing the multibillion-dollar umbrella FIFA organization in Switzerland, but also audits member associations around the world that receive FIFA funding and was the auditor for the official Russia and Qatar organizing committees whose winning World Cup bids have been tainted by the bribery scandal.

A former assistant U.S. attorney told MarketWatch that KPMG absolutely should have caught, and called out, the alleged illegal activities.

“There were sufficient red flags of improper and highly suspicious payments, as well as money transfers to and from officials and others … that should have caused the auditors to highlight and report on them internally, and recommend further investigation,” Robert Appleton said.

“This is especially the case in light of the recent history of this organization, where recent investigations already had found bribery and corruption activity,” he added.

Jerry Silk, a partner at the law firm Bernstein Litowitz Berger and Grossman who has sued global audit firms, said he was surprised that KPMG would not have uncovered evidence of the illegal acts that the U.S. Department of Justice is now alleging.

“KPMG should have been on high alert to the potential for corruption,” he told MarketWatch. “Auditors are supposed to do more and be more vigilant when there’s clearly higher risk.”

Also expressing concern is Greg Dyke, the chairman of England’s Football Association. Referring to an alleged $10 million bribe payment at the center of the U.S. investigation, he said, “Someone should go to the auditors and say, ‘Hang on, where actually did that come from and go to. Where is it in accounts? Did you know about this?’”

A spokesman from KPMG said that “As FIFA’s statutory auditor, we are bound by professional confidentiality and have to refrain from any comment regarding our client.”

KPMG Switzerland claims to be an expert in nonprofit association audits in Switzerland and sponsors a “competence center” to share knowledge inside and outside the firm.

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3 responses to “Did KPMG Auditors Drop the Ball on FIFA?”

  1. Why is everyone surprised that a KPMG or other overly large CPA firm missed some basic issues; like fraud, corruption and lack of oversight?

    Reasons are many, but a short list might include:

    -Those doing the audits are extremely junior.
    -Little or no oversight (supervision) by Senior’s and Manager’s.
    -Partners that are overworked and also aren’t performing oversight.
    -The use of check lists (AICPA Audit Guide or some such similar device) that removes the element of thinking out of the audit process.
    -Let’s not forget the revenue factor.

    The industry really needs to look itself in the face and make some serious changes before government does it for them. Unfortunately, the Enron scandal didn’t shake-up the community because Congress in its infinite wisdom tried to fix the wrong issues.

    Who knows, maybe they will get it right this time…. remember the breakup of Ma Bell….

  2. This is on a very exceptional case that the top management will not oversee the work of junior colleges before putting their signatures on the reports for qualification.
    I think we should look more into the management responsibility in sufficiently giving informations to the auditor on what has gone wrong or is going wrong.
    I must emphasize that the ISA 240 clearly states that it wasn’t the auditors’ responsibility to seek for fraud but must report on alleged frauds when they come across.
    This is enough to back-up why the said firm couldn’t uncover the fraud allegations by FIFA.
    Nevertheless, it could be a blame on the said firm if and only if they were aware and deliberately refused to UNCOVER.
    In any case, auditors are not fraud seeker, and are not responsible for any client being a fraudster in their backs!!!!!!!!

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