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August 29, 2011
KPMG beyond Atlantic Yards: a pattern of dubious accounting practices
Atlantic Yards Report
I was looking up some background on the accounting/consulting firm KPMG, notorious for its dubious (and secondhand) work predicting the Brooklyn housing market on behalf of the Empire State Development Corporation.
Was this part of any pattern? Well, the web site Cheating Culture, founded by David Callahan, author of The Cheating Culture: Why More Americans Are Doing Wrong to Get Ahead, has posted KPMG: A History of Abetting Fraud:
While KPMG has avoided the fate of fellow auditing giant Arthur Anderson, it has primarily done so through quick settlements that prevent its numerous cases of fraud from ever reaching court. Though most of the focus of the financial crisis of 2008 has been placed upon the nation's big financial institutions such as Goldman Sachs, J.P. Morgan and Citibank, more evidence is arising over the role of auditing firms throughout the subprime loan disaster. KPMG was the first "big-four" firm to be hit with a lawsuit, accused in 2009 of "grossly negligent audits" of home loan provider New Century Financial Corp.
Other cases involve:
- a 2005 KPMG settlement "for $22.5 million with SEC for allowing Xerox to manipulate its accounting practices," followed by a 2008 payment to Xerox investors
- a $24 million SEC settlement "over its alleged role in various misstatements and omissions regarding the lending policies of Countrywide Financial" and
- $456 million in penalties paid by eight KPMG executives "to the U.S. Department of Justice for creating illegal tax shelters" to help clients "avoid paying over $2.5 billion in taxes."
Posted by eric at August 29, 2011 9:11 AM