Compliance into the Weeds is the only weekly podcast which takes a deep dive into a compliance related topic, literally going into the weeds to more fully explore a subject. In this episode, Matt Kelly (the coolest guy in compliance) and I take things in a different direction as we welcome Francine McKenna, reporter at MarketWatch and blogger extraordinaire at Re: The Auditors. After one full week of writing, thinking and talking about the SEC enforcement action against KPMG, we provide our initial reflections on the burgeoning scandal.

McKenna discusses:

  • Is the total fine only Starbucks money for KPMG?
  • Why no one had an inkling of this cheating scandal in addition to the PCAOB scandal.
  • Why will the SEC will go out of its way not to put KPMG out of business?
  • What are the federal government audit assignments KPMG currently holds?
  • How should recalcitrant KPMG employees be disciplined?
  • Can the KPMG culture be turned around?

Kelly discusses:

  • Who will be the monitor and what will be their scope? What will they do?
  • How do you hold accounting firms accountable?
  • Channeling his inner Dean Wormer, Kelly asks if KPMG is now on a double Cease and Desist Order?
  • Can KPMG keep public confidence going forward?
  • Did Jay Clayton’s summer 2018 comments include any knowledge of the cheating scandal?

Fox discusses:

  • Was it negligent or intentional conduct involved?
  • How heavy is the shadow of Arthur Anderson in this matter?
  • Why the government will use all means possible not to put KPMG out of business?
  • KPMG in currently involved in multiple scandals, in at least 3 separate continents. Where and when will it end?
  • Is it time to break up the Big 4?
  • Is this fine really even a meaningful sanction?

For additional reading,  check out the following resources:

You should start with McKenna’s great piece on the scandal in MarketWatch, “The KPMG cheating scandal was much more widespread than originally thought

Matt’s blog post-Questions on the KPMG Ethics Fiasco

Tom’s blog post-Day of Reckoning for KPMG-Failures in Ethics

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