October 24, 2022
Technical Staff
An examination of inspection data finds that US regulators were twice as likely to discover flaws in audits completed by KPMG’s overseas affiliates as those performed by any other Big Four accounting firm.
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The Public Company Accounting Oversight Board ramps up enforcement and intends to hold non-US affiliates of multinational firms accountable to American standards.
According to the Public Company Accounting Oversight Board (PCAOB), three of KPMG’s overseas affiliates used unregistered firms in Poland or Romania to carry out components of their audits while telling the agency that they used a specific, registered entity. KPMG Canada was fined $150,000 for an infraction connected to the audit of Celestica; KPMG Italy was fined $75,000 for work for luxury furniture maker Natuzzi; and KPMG Netherlands was fined $50,000 for its audit of ING, the financial institution.
The PCAOB report reveals significant deficiencies in the Big 4 companies’ ability to oversee their overseas networks effectively. Therefore, there are substantial doubts about the effectiveness of the audit profession in many countries, especially where corruption levels are rife and regulators are incompetent or ineffective.
The audit quality diminishes as corruption flourishes. As a result, stakeholders should lower their reliance on and confidence in the audit reports issued in countries where corruption and money laundering risks are high.
Photo by Alexander Suhorucov: https://www.pexels.com/photo/multiethnic-businesswomen-checking-information-in-documents-6457521/
