KPMG US removes head of audit for ‘improper’ warnings
The firm said it learned in late February, from an internal source, that an individual who had joined KPMG from the PCAOB subsequently received confidential information from a then-employee of the PCAOB, and shared that information with other KPMG personnel.
KPMG said this information potentially undermined the integrity of the regulatory process, and those involved had violated the firm’s code of conduct.
They included Scott Marcello, KPMG’s vice chair, audit, who was also the America’s leader for audit for KPMG International, and a member of the firm’s management committee. A former member of KPMG’s US board of directors, he had been with the firm for more than 30 years and had also served as a member of KPMG’s global financial services leadership team.
KPMG said it immediately reported the situation to the PCAOB and the Securities and Exchange Commission (SEC), and retained outside counsel to investigate. The firm learned through the investigation that the six KPMG individuals either had improper advance warnings of engagements to be inspected by the PCAOB, or were aware that others had received such advance warnings and had failed to properly report the situation.
Lynne Doughtie, KPMG chairman and CEO, said: ‘KPMG has zero-tolerance for such unethical behaviour. Quality and integrity are the cornerstones of all we do and that includes operating with the utmost respect and regard for the regulatory process.
‘KPMG is committed to the highest standards of professionalism, integrity and quality, and we are dedicated to the capital markets we serve. We are taking additional steps to ensure that such a situation should not happen again.’
Frank Casal, a former member of the firm’s board of directors, has been named as Marcello’s replacement. He has spent 39 years with KPMG, and has served previously as the lead audit engagement partner on some of its largest, publicly held financial services and industrial manufacturing clients.
Doughtie said: ‘Frank is a proven leader and is widely regarded as a champion of professionalism and integrity. His strong commitment to professional excellence and his intense focus on audit quality will provide valued and effective leadership. Frank will work closely with the audit leadership team to execute and implement the practice’s strategic priorities.’
Doughtie also announced the appointment of Jackie Daylor as national managing partner for audit quality and professional practice. Daylor, who has been with the firm for 28 years, is a member of KPMG’s board of directors and the firm’s professional practice, ethics and compliance committee.
KPMG said the issue does not impact any of the firm’s audit opinions or any client’s financial statements.
Source: CCH Daily