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April 20, 2005
KPMG settles with SEC in Xerox audit case
KPMG LLP agreed to pay a record (for an auditing firm, anyway) $22.5 million to settle SEC charges in connection with the firm's audits of Xerox Corp. from 1997 through 2000. KPMG has had its share of legal problems over the past couple of years.
As is typical in such deals, KPMG consented to entry of the order in U.S. district court in New York without admitting or denying the charges. During the four year period involved in the Xerox case, the SEC alleged that Xerox overstated its revenue by $3 billion and its earnings by $1.5 billion in an effort to bolster its stock price. Xerox previously paid a $10 million penalty in 2002, which at the time was a record fine. In addition, six former senior Xerox executives have paid penalties and disgorged profits totaling $22 million, and a civil-fraud lawsuit against five current and former KPMG partners involved in the Xerox audits is continuing.
As part of the settlement, KPMG agreed to take certain remedial actions, including a review process for any change in assignment of an audit partner, establishing whistle-blower channels within KPMG, and the retention of an outside consultant to review its policies and certify to the SEC that the changes are in effect two years from now.
Posted by Tom at April 20, 2005 5:36 AM |
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