Friday, August 27, 2004
Today’s Wall Street Journal reports that the U.S. Public Company Accounting Oversight Board has criticized KPMG for accepting contingent fees based on the amount of tax savings generated by KPMG. Although the public report said only that “significant audit and accounting issues were missed by the firms,” KPMG came forward to disclose the Board’s criticism in the confidential sections of the report. Deloitte & Touche, Ernst & Young, and PricewaterhouseCoopers all declined to specify what concerns, if any, the Board had raised about them in the confidential sections of the report. The WSJ notes the growing criticism of the law permitting the Board to disclose the Big Four’s infractions only if they are not fixed within a year.
2 responses to “Accounting Board Chides KPMG for Accepting Contingent Fees Based on Tax Savings”
Does this prove that consolidation works or does not work? Like “Ten Little Indians”, can we expect even further consolidation? How well is the investing public being served by these auditors of public companies? Isn’t this consolidation anti-competitive in the long run?
Sounds like the Board is not too keen on options. The main feature of the scheme is that it gives KPMG an option on tax savings (does it say somewhere where the strike is and whether there is a ceiling?). It does not mean that this is from an agency perspective the right scheme but this is funny that the Board objects while taxes are themselves option! By the way we have added your great blog on http://www.cyberlibris.com . We hope European students, professors and executives will learn a lot from you!