The Public Company Accounting Oversight Board on Tuesday fined KPMG LLP’s Korea unit $350,000 for failing to set up adequate quality controls to prevent improper changes to work papers.
The fine was the U.S. audit watchdog’s latest enforcement action against a non-U.S. member of a Big Four firm. The targeted unit, KPMG Samjong Accounting Corp., was also ordered to improve its quality-control systems.
The former employees were charged with improperly altering work papers—the documents auditors collect while assessing their clients’ financials—and with violating auditing standards in connection with the same audit of an unnamed U.S.-listed company. The two men have been barred from associating with a PCAOB-registered audit firm, with the right to petition for reinstatement after three years.
“Auditors’ improper alteration of audit documentation undermines the integrity of the Board’s inspection processes and impedes the Board’s mission to improve audit quality and protect investors,” PCAOB Chair Erica Williams said in a statement.
KPMG didn’t immediately respond to a request for comment.
The PCAOB sets audit standards, inspects audits and also disciplines audit firms and individual auditors for violations. The board disclosed 18 enforcement actions last year, up from 13 the prior year, but down from the 2016-2020 average of 29, according to an analysis of regulatory data by Cornerstone Research, a financial-consulting firm.
The PCAOB, which oversees audits of U.S.-listed companies, occasionally fines foreign units of the Big Four firms, a group that also includes Ernst & Young, PricewaterhouseCoopers and Deloitte, a sponsor of CFO Journal.
In April, the PCAOB fined the fired former head of KPMG’s U.S. audit business $100,000, the largest monetary penalty it has ever imposed on an individual in a settled case.
Separately on Tuesday, the PCAOB proposed its latest five-year strategic plan, including strengthening enforcement and updating its auditing standards. The plan call for a “more assertive” approach to bringing enforcement actions against audit firms and individual auditors.
“We are taking steps to proactively seek out wrongdoing by increasing the use of sweeps against firms where there may be a violation of our standards or rules,” Ms. Williams said.
The board opened its proposed 2022-2026 plan for public comment till Sept. 15. Tuesday’s proposal of a five-year plan is the first under Ms. Williams, who became board chair in January.
Source: The Wall Street Journal