The Securities and Exchange Commission and the U.S. Attorney’s Office for the Southern District of New York announced charges on Monday against six certified public accountants – five former KPMG partners and one former staffer at the audit regulator, the Public Company Accounting Oversight Board. They allegedly misappropriated and used confidential information relating to the PCAOB’s planned inspections of KPMG audits. The SEC alleges that the misconduct allegedly began in 2015 when former PCAOB officials made unauthorized downloads of the regulator’s plans for inspections of KPMG audits, enabling the former KPMG partners to revise audit workpapers to mimimize negative inspection results. Soon after the conduct was discovered in early 2017, the six respondents were terminated, resigned or placed on leave before separating from KPMG and the PCAOB, respectively. SEC Chairman Jay Clayton in a statement said that the alleged conduct is “disturbing” but he does not currently believe that this will adversely affect the ability of companies to continue to use audit reports issued by KPMG or for investors to rely upon those reports.
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