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SEC Fines Auditor $50 Million over Use of PCAOB Data, Cheating on Internal Exams

The SEC charged KPMG with altering past audit work after receiving stolen information about inspections of the firm that would be conducted by the PCAOB.  The SEC’s order also found that numerous KPMG audit professionals cheated on internal training exams by improperly sharing answers and manipulating test results.  The firm agreed to settle the charges by paying a $50 million penalty and complying with a detailed set of undertakings, including retaining an independent consultant to review and assess the firm’s ethics and integrity controls and its compliance with various undertakings.The Wall Street Journal reports that the penalty is among the highest ever imposed on an auditor by the SEC. “The breadth and seriousness of the misconduct at issue here is, frankly, astonishing,” said Steven Peikin, Co-Director of the SEC’s Enforcement Division. “This settlement reflects the need to severely punish this sort of wrongdoing while putting in place measures designed to prevent its recurrence.”A MarketWatch report on the SEC’s sanctions of KPMG details previous misconduct by other accounting firms, and industry observers quoted in the report argue that the regulatory penalties may not be effectively deterring misconduct.

 
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