Accounting and Auditing Enforcement release, No. 3834, summarizes KPMG’s violation Rule 2-06 of Regulation S-X, requiring auditors to preserve audit workpapers “for seven years after concluding an audit or review of an issuer’s financial statements” (SEC No.3834).
Accordingly, the SEC as per the SEC Act of 1934, issued a cease and desist order from committing or causing any violations of Rule 2-06. Given that KPMG was found in violation, the Commission took other consideration to quantify the penalty in which KPMG was liable. Considerations that the Commission took where KPMGs enhancement of its policies and procedures that govern the “retention of audit paper works”. KPMG undertook their investigation. They concluded that the original paperwork contained:
Consequentially, they concluded that the relevant documents/paperwork were not included in the 2008 Workpapers when it was collected, and then effectively lost. Ultimately, they could produce and electronic company of what was “believed to be” a final summary, but the facts of the matter stays as “missing client prepared schedules”. Conclusion of The Analysis: KPMG was found liable to pay a civil money penalty of $230,000, set to be transferred to the US treasury. The findings do not explicitly state that the considerations or steps of the following KPMG actions (after the fact of the violation) reduced the penalty, but it is my opinion that the documents implicitly reference that the considerations may have implicated a smaller penalty fee (please note the following two points “1 and 2” are direct statements from the Auditing Enforcement Release):
Other Considerations Involved In The Research Process
1 Comment
8/11/2019 11:05:10 am
Actually, I know nothing about Accounting and Auditing Enforcement! That's why all these words that I am reading right now are kind of surprised for me. But I am glad to see all these words because it was new to me; that means there is something new to learn. We all know that auditing is related to numbers, that's why I will never be known to that. I know myself so much and I hate numbers! But then again, I am thankful that I got the chance to know this!
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