KPMG Cheating Scandal: Litigation, Censures, and Fines

KPMG Cheating Scandal
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KPMG Cheating Scandal
KPMG LLP, one of the big four accounting firms, emerging top in terms of revenue and also as a training agent for top companies across the globe, has on several occasions locked horns with the authorities and faced lawsuits from clients for participating in scandalous and deceitful activities that are unbecoming of such a reputable accounting firm. The most notable scandal of the decade, perpetuated by KPMG auditors, with some senior partners of the company taking part in the act, was when the company shared answers for the ethics, integrity, and compliance training test to the staff and partners to allow them to score favorable grades (Johnson, 2019). In addition, the company was found guilty of using stolen information and altering past audit work prior to the firm inspection by the Public Company Accounting Oversight Board (PCAOB) (SEC.gov, 2019). The misconduct by the accounting firm attracted a fine of $50 million alongside other penalties that included requiring the firm to have an independent consultant to oversee its ethical standards and integrity (SEC.gov, 2019). $50 million is a huge sum of money that definitely had financial implication for the company. Having an independent consultant overseeing its ethics and integrity is damaging to the company’s reputation and might inhibit the level of trust from the clients.
Ethics and ethical behaviors for accounting firms demand that the basic virtues of honesty, integrity, and morality are upheld. In addition to the diverse ethical code of conduct set by the different governing bodies and authorities, confidentiality, professionalism, and adherence to accounting procedures are the universal ethical conducts expected of an accounting firm and professional (Jaijairam, 2017). Alongside the ethical standards and code of conduct are the internal control and accounting principles that serve to enhance internal auditing and ensure the firm abides by the applicable laws and regulations (Jaijairam, 2017). By enabling the auditors and senior partners to obtain confidential information, KPMG compromized the ethics and integrity controls and also violated the compliance requirement by the relevant authorities, key elements of internal checks.
The global code of conduct set out by KPMG requires all its stakeholders to abide by it and acts as the guiding principle to the company’s behavior and a benchmark for decision making (KPMG, 2019). The core values and ethical standards set out by KPMG's global code of conduct that influenced the company auditors and senior partners to partake in the act that eventually attracted penalties from the SEC were the company's great desire for excellence and the boldness expected of all the company stakeholders. SEC acknowledges that ...