Other cases
KPMG agreed to pay $125 million and $75 million to settle lawsuits stemming from the firm's audits of Rite Aid and Oxford Health Plans Inc., respectively.[106]
KPMG agreed to pay $115 million to settle lawsuits stemming from the collapse of software company Lernout & Hauspie Speech Products NV.[107][108]
During August, KPMG LLP admitted to criminal wrongdoing and agreed to pay US$456 million in fines, restitution, and penalties as part of an agreement to defer prosecution of the firm, according to the US Justice Department and the Internal Revenue Service. In addition to the agreement, nine individuals, including six former KPMG partners and the former deputy chairman of the firm, were to be criminally prosecuted. As alleged in a series of charging documents, the fraud relates to the design, marketing, and implementation of fraudulent tax shelters.[109]
American real estate financing firm Fannie Mae sued KPMG for malpractice for approving years of erroneous financial statements.[110]
In February, KPMG Germany was investigated for ignoring questionable payments in the Siemens bribery case.[111] In November 2008, the Siemens Supervisory Board recommended changing auditors from KPMG to Ernst & Young.[112]
In February, KPMG Mauritius was sued by a group of South African pensioners who lost millions when investing in Leaderguard Spot Forex (LSF), a foreign exchange investment scheme backed by KPMG and Denmark-based Saxo Bank. The suit against KPMG was just for the portion lost during their involvement.[113][114]
In March, KPMG was accused of enabling "improper and imprudent practices" at New Century Financial, a failed mortgage company,[115] and KPMG agreed to pay $80 million to settle suits from Xerox shareholders over manipulated earnings reports.[116]
In December, it was announced that two of Tremont Group's Rye Select funds, audited by KPMG, had $2.37 billion invested with the Madoff "Ponzi scheme".[117] Class action suits were filed.[118]
In March 2008, KPMG employees in the UK and South Africa were accused of bribing and recruiting employees of commercial structures to collect trade secrets for a monetary reward.[119][120]
In August, it was reported by the Swedish Financial Supervisory Authority to the Swedish accountancy regulator after HQ Bank was forced into involuntary liquidation after the Financial Supervisory Authority revoked all its licences for breach of banking regulations.[121]
In August, KPMG conducted due diligence work on Hewlett-Packard's $11.1 billion acquisition of the British software company Autonomy. In November 2012 HP announced an $8.8 billion write off due to "serious accounting improprieties" committed by Autonomy management prior to the acquisition.[122][123]
According to an independent panel formed to investigate irregular payments made by Olympus which reported in December, KPMG's affiliate in Japan did not identify fraud at the company.[124]
In April, Scott London, a former KPMG LLP partner in charge of KPMG's US Los Angeles-based Pacific Southwest audit practice, admitted passing on stock tips about clients, including Herbalife, Skechers, and other companies, to his friend Bryan Shaw, a California jewelry-store owner.[125] In return Shaw gave London $70,000 as well as gifts that included a $12,000 Rolex watch and concert tickets.[126][125] On 6 May, Shaw agreed to plead guilty to one count of conspiracy to commit securities fraud. He also agreed to pay around $1.3 million in restitution, and to cooperate with the government as part of a plea deal with federal prosecutors.[127] This scandal led KPMG to resign as auditor for Herbalife and Skechers.[128]
The Office of Counter-Terrorism and Financial Intelligence of the US Department of the Treasury accused KMPG, Ernst & Young and PwC of collaborating with British intelligence services to provide analytical information on financial transactions and reports of British organizations operating in the United States with contract agreements with government agencies.[129]
KPMG was accused by the Canada Revenue Agency of abetting tax evasion schemes: "The CRA alleges that the KPMG tax structure was in reality a 'sham' that intended to deceive the taxman."[130]
The Canada Revenue Agency offered an amnesty to KPMG clients caught using an offshore tax-avoidance scheme on the Isle of Man.[131]
KPMG US terminated five partners in its audit practice, including the head of its audit practice in the US, after an investigation of advanced confidential knowledge of planned audit inspections by its Public Company Accounting Oversight Board (PCAOB).[132] This followed criticism about KPMG's failure to uncover illegal sales practices at Wells Fargo or potential corruption at FIFA, the governing international body of football.[133] It was reported in 2017 that KPMG had the highest number of deficiencies, among the Big Four, cited by its regulator in the previous two years.[134] This includes two annual inspections that were compromised as a result of advanced access to inspection information. In March 2019, David Middendorf and Jeffrey Wada, co-defendants in the scandal, were convicted.[135]
The UK accounting regulator, the Financial Regulation Council (FRC), has opened an investigation into KPMG's audit of the financial statements of British aerospace company Rolls-Royce plc for the year ended December 2010.[136]
In August, KPMG US paid a $6.2 million fine to the US Securities and Exchange Commission for inadequacies in its audit of the financial statements of oil and gas company, Miller Energy Resources.[137] It also found KPMG guilty of a long list of violations with regard to its audits, including "lack of competence" and "highly unreasonable conduct."[138]
In November, 91 partners of KPMG Hong Kong faced contempt proceedings in Hong Kong High Court, as China Medical Technologies (CMED) liquidators investigating a $400 million fraud took action against KPMG with regard to its refusal to honor a February 2016 court order to produce Chinese working papers, correspondence, and records to the liquidators.[139][140][141][142][143] The liquidators are asking that 91 defendants be held in contempt of court, which could result in criminal penalties, or weekly fines.[139] KPMG had issued written audit reports for CMED from 2003 to 2008, and was replaced by PwC Zhong Tian in August 2009.[140]
In July, KPMG came under criticism for its role in the bankruptcy of Dubai-based private equity firm Abraaj Group after it was determined that KPMG Lower Gulf Chairman and Chief Executive Vijay Malhotra's son had worked at Abraaj and that an executive named Ashish Dave alternated between stints at KPMG and as Abraaj's chief financial officer, a job he held twice.[144]
Also in July, the Financial Reporting Council (FRC) announced an investigation into KPMG’s work for Conviviality, the British drinks supplier that collapsed into administration during April 2018.[145]
Also in July, KPMG paid HK$650 million (US$84 million) to settle legal claims after failing to identify fraud at a Chinese timber company, China Forestry. The liquidators of China Forestry claimed KPMG was negligent when it failed to detect serious false accounting by some of the company’s top management ahead of its listing in 2009.[146]
In August, Chile's Comision Para El Mercado Financiero (CMF) sanctioned KPMG Auditores Consultores Limitada (KPMG LLP's local affiliate) 3,000 UF (~$114,000), and Joaquín Lira Herreros, its partner, for offences incurred in the audit made to the financial statements of the Aurus Insignia Fondo de Inversión, managed by Aurus Capital S.A. Admnistradora General de Fondos Management (AGF), corresponding to the year 2014.[147]
In November, the Sultanate of Oman's Capital Market Authority (CMA) suspended KPMG from auditing entities regulated by the CMA for a period of one year after discovering major financial and accounting irregularities in the entities' records.[148][149][150]
In December, KPMG South Africa published an open apology for its participation in various scandals in South Africa, including publishing a misleading report that led to the resignation of the South African Finance Minister, involvement with the Gupta family who have been implicated in corruption scandal with former President Jacob Zuma, and acting as the auditor of VBS Mutual Bank that collapsed due to fraud. Its top eight staff resigned during 2017 and its workforce shrank from 3,400 to 2,200.[151]
KPMG were fined £5 million by the Financial Reporting Council for misconduct shortly after the takeover of the Britannia Building Society by The Co-operative Bank, particularly relating to the valuation of Britannia's commercial loans and other liabilities. The takeover led to the near collapse of The Co-operative Bank.[152]
KPMG was fined $50 million by the U.S. Securities and Exchange Commission for illicit use of PCAOB data and cheating on training exams.[153][154]
In June 2019, KPMG was fined $50 million for altering its past audit work after receiving stolen data from accounting industry watch dog PCAOB. KPMG admitted to its mistakes and as a part of its settlement, it also agreed to hire an independent consultant to review its internal controls.[155]
During April, KPMG UK was fined £455,000 and a senior partner, Nicola Quayle, was fined £29,250 by the Financial Reporting Council for failing to challenge what a client was telling them about certain complex supplier arrangements.[156]
In June, KPMG resigned from the auditor role of British fashion firm Ted Baker plc after the company admitted accounting errors resulting in overstatement of its inventory by up to £58 million.[157]
In February, the liquidators for the South African bank VBS Mutual Bank sued KPMG for 863.5 million rand (~US$59 million) over its audit opinion on the now defunct bank.[158]
In March, KPMG US agreed to pay $10 million to settle a 10-year gender discrimination lawsuit in a New York Federal Court that alleged claims by 450 women that its culture was rife with gender discrimination, sexual harassment, and retaliation.[159]
During May, members of the Canadian Parliament's House of Commons finance committee re-launched a probe into offshore tax evasion by interviewing Lucia Iacovelli, managing partner at KPMG.[160]
KPMG in the UK was sued for more than £6 million (~€6.9 million, ~US$7.8 million) by property company Mount Anvil which claims it was left with an unexpected tax bill after the firm provided it with negligent advice.[161]
In July, the Financial Reporting Council (FRC) criticised KPMG for its "unacceptable" failure to meet required standards in its audits of banks for a third year running. Only 61% of KPMG’s audits sampled by the regulator met industry standards.[162]
The Government of Malaysia and the state sovereign fund, 1MDB, launched a lawsuit seeking over $5.6 billion in damages from KPMG partners for alleged breaches and negligence linked to a corruption scandal at the fund.[163]
South Africa's largest asset manager, the Public Investment Corporation (PIC), sued KPMG for 144 million rand (~U$9.5 million) it lost when the VBS Mutual Bank went bankrupt as a result of fraud. Its claim is centred on the rights issue and a revolving credit facility it participated in at VBS relying on financial statements audited by KPMG and its former senior partner, Sipho Malaba.[164]
In August, a tribunal convened by the FRC fined KPMG £13m and ordered it to pay £2.75m in costs. This was because of its serious misconduct in the sale of bed company Silentnight. The tribunal found that KPMG had helped private equity group H.I.G Capital drive Silentnight into an insolvency process, so that HIG could acquire the company without its £100m pension scheme. KPMG was severely reprimanded by the tribunal, and was ordered to appoint an independent reviewer to check a sample of previous cases for similar failings.[165] The tribunal ruled that KPMG's involvement with Silentnight was "deeply troubling" as it failed to act solely in its client's interests.[166]
In September, PCAOB fined KPMG Australia $450,000 after it confessed to a cheating scandal involving over 1,100 (almost 12%) of its employees.[167]
In November, the British litigation financing firm Augusta Ventures announced that it would bankroll three $152.4-million lawsuits in Canada against the previous auditor (KPMG LLP), authorized legal adviser (Cassels Brock & Blackwell LLP) and monetary adviser (Canaccord Genuity Corp) of Cash Store Financial Services Inc., a Canadian payday lender that filed for creditor safety in 2014. Bill Aziz, the litigation trustee for Cash Store, said, "It’s alleged in these lawsuits that KPMG, Cassels Brock and Canaccord triggered over $100-million in damages to Cash Store and its collectors."[168]
Also in November, KPMG UK was hit with a £15m lawsuit by insurance outsourcer Watchstone—formerly known as Quindell—over allegations it suffered losses because of the audit firm's negligence in 2013.[169]
Also in November, two units of Abraaj that are now in liquidation filed a lawsuit in Dubai against KPMG LLP for damages of US$600 million alleging that KPMG accountants "failed to maintain independence and an appropriate attitude of professional skepticism," and breached their duty of care when auditing the private-equity firm.[170]
In January, the Malaysian government reported that KPMG's local affiliate had agreed to pay a fine of RM 333 million ($111 million) to settle the case filed against it in connection with the 1MDB funds scandal.[171]
A group of investors in Airbus, the Dutch foundation Stichting Investor Loss Compensation (SILC), filed a lawsuit against Airbus, KPMG and EY in the Hague District Court alleging they suffered damages worth at least €300 million (US$340 million) as a result of the company's misleading publications about its involvement in and financial settlements involving corruption, bribery, and other forms of fraud.[172]
The UK accounting regulator, the Financial Reporting Council (FRC), fined KPMG £3 million for audit failings at collapsed alcohol retailer Conviviality.[173]
A settlement agreement between the Financial Reporting Council and a KPMG partner, Stuart Smith, who led the firm’s audit of IT company Regenersis, later renamed as Blancco Technology Group, resulted in a fine of £150,000 after he admitted misleading its inspectors.[174]
During March, the Financial Reporting Council (FRC) fined KPMG UK £1.3 million for serious failings within their audits of British bar chain, Revolution Bars Group.[175]
The US securities regulator, the Securities Exchange Commission, announced an investigation into conflicts of interest at auditors, including KPMG's US branch, KPMG LLP.[176]
During April, the US accounting regulator, PCAOB, fined the former head of KPMG's US audit practice, Scott Marcello, a record US$100,000 for having failed to reasonably supervise senior auditors who engaged in the scheme to improve KPMG’s inspection results.[177]
During May, the Financial Reporting Council confirmed that KPMG would face a £14.4 million (~US$18 million) fine and a severe reprimand over false representations made by KPMG employees to the regulator concerning Carillion. (See 'Carillion audit role' section below).[178]
In May, The Times reported that the FRC was close to finishing its investigation into KPMG UK's audit of the financial statements of Rolls-Royce plc for the year ended December 2010; the investigation was begun in 2017 and the FRC may fine KPMG UK up to £4.5 million (~US$5.6 million) for questionable audit practices.[179]
In August, the PCAOB, which reviews audit procedures of foreign firms that audit US-listed entities, fined KPMG South Korea US$500,000 for failing to have proper procedures in place to prevent its auditors from doctoring work papers. It also fined two of its partners and banned them from working for a PCAOB registered audit firm for three years, as they were found to have improperly altered documents and violated auditing standards during the Big Four firm’s 2018 audit of the Korean business of an unnamed US-listed company.[180]
In September, a lawsuit was filed in the Hong Kong High Court which accused KPMG of "appalling" audit work that allowed a Chinese medical technology company, China Medical Technologies, to commit a US$400 million accounting fraud, and which sought up to US$830 million in damages.[181]
In October, Dubai Emirate's financial regulator, Dubai Financial Services Authority, handed provisional fines of US$2 million to KPMG's UAE affiliate (US$1.5 million) and one of its audit employees, Milind Navalkar (US$0.5 million), for failing to follow international audit standards in the audit of the failed Dubai-based private equity firm The Abraaj Group.[182]
Also, KPMG affiliate KPMG Lower Gulf's CEO, Nader Haffar, quit consequent to a tumultuous year filled with accusations of nepotism, cronyism and partner discontent. This was a month after Nader had sent a letter to clients in the UAE and Oman in which the firm’s 30 partners said that they remained united.[183]
In addition, the PCAOB fined KPMG's Italian, Dutch and Canadian affiliates approximately US$275,000 for concealing the outsourcing of some audit work to unregulated firms in Poland and Romania.[184]
In November, KPMG UK agreed to pay £5 million (US$6 million) in settlement of a lawsuit by a former client, insurance software firm Quindell, relating to deficient audit work for Quindell (now known as Watchstone) relating to its 2013 financial statements.[185]
The Abu Dhabi Accountability Authority (ADAA), which monitors Abu Dhabi government-owned and related entities, removed KPMG’s Lower Gulf affiliate from its list of authorized auditors that can sign off on financial statements.[186]
In December, the PCAOB announced that its inspectors had discovered that hundreds of KPMG employees in the UK and Colombia affiliates cheated on their compliance exams. In addition, inspectors also discovered document alterations to deceive inspectors in KPMG's Colombia affiliate, and blank audit papers signed by an KPMG affiliate audit partner in India. KPMG LLP agreed to pay US$7.7 million in fines. This follows a US$50 million fine in 2019 where KPMG employees were using data stolen from the PCAOB to identify which audits would be reviewed.[187]
In February, KPMG UK confidentially settled the £1.3 billion (US$1.6 billion) lawsuit launched in 2022 by the UK's Official Receiver relating to KPMG's audit of the failed construction firm, Carillion, between 2014 - 2018.[188]
Also in February, a Disciplinary Tribunal, appointed by the UK's Financial Reporting Council and led by Sir Stanley Burnton, concluded that members of the audit teams deliberately misled the FRC’s Audit Quality Review (AQR) teams about KPMG’s audits of Carillion plc and Regenersis plc by altering existing documents and by creating entirely new documents during the course of the inspection. This showed, the Tribunal found, a clear intention to mislead the regulator.[189]
In April, KPMG Lower Gulf was ordered by a Dubai court to pay 850 million United Arab Emirates dirhams (~US$231 million) to a group of investors who claim they lost money because of poor-quality audits of its client, The Abraaj Group.[190]
Also in April, KPMG’s Canadian affiliate was sued for Canadian $1.4 billion (~US$1.1 billion) by PriceWaterhouseCoopers, the Receiver winding down defunct financing firm Bridging Finance Inc., for negligently failing to detect and report on misstatements in its financial statements before the firm’s collapse in 2021.[191]
Also in April, the Financial Reporting Council fined KPMG's UK affiliate £1 million (~US$1.3 million) for failing to meet audit requirements in the case of the 2020 financial statements of its client, the stationery company TheWorks.co.uk plc, particularly its inventory.[192]
The Financial Reporting Council fined KPMG's UK affiliate £875,000 in April (~US$1.1 million) for failing to meet audit requirements in the case of the 2016 financial statements of its client, lighting company Luceco, particularly with regard to inventory cost errors.[193]
During May, the PCAOB released inspection reports regarding KPMG's China affiliate KPMG Huazhen LLP that Holding Foreign Companies Accountable Act (HFCAA) made possible. It concluded that it discovered "deficiencies of such significance that PCAOB staff believe the audit firm failed to obtain sufficient appropriate audit evidence to support its work on the public company’s financial statements or internal control over financial reporting".[194]
During June, the UK accounting regulator Financial Reporting Council imposed a £877,000 (~US$1.1 million) fine on KPMG's UK affiliate for not satisfying relevant requirements regarding its 2017 audit of the financial statements of the logistics company Eddie Stobart Group.[195]
In July, KPMG Nederland announced that over 100 employees of the Dutch affiliate of KPMG were found to have cheated annually on their exams over the past five years and that its director Marc Hogeboom would also step down as boss of the accounting arm.[196]
In August, KPMG Australia was accused by two whistleblowers of submitting inflated invoices and billing the Australian Department of Defence for hours never worked. KPMG has reportedly charged this department A$1.8 billion (~US$1.2 billion) over the past decade.[197]
Also in August, the registration authority of the Abu Dhabi Global Market imposed a AED110,000 (~US$30,000) penalty on KPMG Lower Gulf for “ineffective systems and controls leading to non-compliance with audit requirements”.[198]
During November, the PCAOB imposed a fine of US$80,000 on KPMG affiliates in Brazil and Argentina for failing to communicate adequately with their client's audit committees, and a US$500,000 fine on its Japanese affiliate for quality control violations.[199]
KPMG was criticized for its audits of three regional American banks which collapsed in 2023: Signature Bank, First Republic Bank, and Silicon Valley Bank (SVB).[200][201] The United States Senate’s Permanent Subcommittee on Investigations later released a report which noted the inadequate practices by KPMG, though the firm denies the findings.[202]
In late December 2023 an organisation named Collectif Porteurs H2O, that represents 9,000 individual investors in funds managed by French asset manager, H2O, sued its auditor, KPMG's French affiliate, as being jointly liable, along with H2O, its former parent Natixis, and its custodian CACEIS, for the losses of almost €700 million ($764 million) due to investments in illiquid assets tied to German financier Lars Windhorst. The UK financial regulator, Financial Conduct Authority, in August made H2O compensate investors to the extent of €250 million ($273 million) and forced H2O to relinquish its UK license. H2O was separately fined €75 million ($82 million) in 2022 by the French regulator, Autorité des Marchés Financiers (France).[203]
During February, KPMG's South African affiliate is supposed to have entered into a confidential out-of-court settlement of 500 million Rand (~$27 million) with the liquidators of bankrupt South African bank VBS Mutual Bank in response to their lawsuit against KPMG filed in February 2021 for 863.5 million Rand (~$59 million).[204]
In March, KPMG's UK affiliate was fined £1.46 million ($1.9 million) by the Financial Reporting Council for 'basic failings' in its audit of the 2018 financial statements of advertising agency M&C Saatchi plc. FRC indicated that KPMG would have been fined £2.25 million ($2.8 million) had it not admitted to the breaches.[205]
Also in March, the Public Company Accounting Oversight Board sanctioned three partners of KPMG China affiliate KPMG Huazhen LLP for violations of audit standards, and fined it $150,000.[206]
In April, the PCAOB fined KPMG's Netherlands affiliate, KPMG Accountants N.V, US$25 million for violations of its rules and quality control standards relating to the firm’s internal training program and monitoring of its system of quality control. The PCAOB found that widespread improper answer sharing occurred at the firm over a five-year period and that the firm made multiple misrepresentations to the PCAOB about its knowledge of the misconduct.[207]
KPMG has been criticized over its audit for the distressed New York Community Bank (NYCB) in light of its passing audits for three regional banks that failed in 2023.[208]
During August, the National Financial Reporting Authority (NFRA), an independent regulatory body in India that oversees the accounting and auditing of companies, fined KPMG's Indian affiliate, BSR & Associates LLP, 10 crore rupees (~$1.2 million) for lapses in auditing the 2018-19 financial statements of the coffee chain Coffee Day Enterprises and barred two of its partners from audit work for up to ten years. This followed an earlier 2.15 crore rupee (~$0.3 million) fine for similar lapses with a related entity, Coffee Day Global.[209]
During January, the Financial Reporting Council announced that it has opened an investigation into the 2022 audit of the gambling company Entain, which was conducted by KPMG's UK affiliate.[210]
During March, the PCAOB announced nine settled disciplinary orders sanctioning nine firms from KPMG’s global network (Switzerland, Korea, Australia, Canada, Brazil, Italy, Israel, Mexico and UK) for violations of PCAOB rules and standards, including quality control standards. Each firm consented to a PCAOB order that censures the firm and imposes civil money penalties totaling US$3.375 million.[211]
During June, the Financial Reporting Council, announced a fine of £0.69 million (US$0.8 million) on KPMG's UK affiliate as a result of an investigation into auditor independence during the financial audit of UK manufacturing firm Carr’s Group, where KPMG was found to be relying on another firm’s work.[212]
During February, KPMG Australia announced that it has fined one of its Australian partners A$10,000 (approx. US$7,085) for using Artificial Intelligence (AI) technology during his appearance for an internal examination about AI. KPMG Australia indicated that two dozen other employees have been discovered similarly cheating using KPMG's AI technology.[213]
In March 2026, the Ontario Securities Commission commenced enforcement proceedings against KPMG, alleging deficiencies in its audits of certain Bridging Finance Inc. funds that may have affected investor confidence. The OSC's claim alledged that "KPMG failed to perform fundamental audit procedures over the most critical aspect of the financial statements — the valuation of the loans held within each of the funds...”[214][215]
