JOHANNESBURG - The US Securities and Exchange Commission (SEC) has slapped KPMG, Deloitte & Touche, and BDO for their involvement in audit work that circumvented its guidelines.
The firms agreed to settle the charges by paying penalties or disgorging their profits from the audits.Without admitting or denying the findings, BDO Canada agreed to pay a $50,000 penalty, KPMG in South Africa agreed to pay a $100,000 penalty, Deloitte in Zimbabwe agreed to pay disgorgement and interest totaling $99,057, and KPMG in Zimbabwe agreed to pay disgorgement and interest totaling $141,305.
Scott Friestad, the associate director of the SEC’s division of enforcement, said: “It’s in the best interest of Main Street investors that all firms substantially involved in the audit of a public company are properly registered with the Public Company Accounting Oversight Board (PCAOB) so they are subject to the oversight necessary to ensure accuracy and prevent fraud,” Friestad said.
“These unregistered foreign component auditors performed significant audit work outside the PCAOB’s regulatory purview, and the principal auditors failed to consider the registration status of these firms as they used their work.”
According to the SEC’s orders, the Zimbabwe affiliates of Deloitte & Touche and KPMG improperly audited the majority of assets and revenues of a publicly traded company without registering with the PCAOB.
The SEC further found that KPMG’s affiliate in South Africa and BDO’s Canadian affiliate – were registered with the PCAOB but improperly relied upon the work of the two unregistered foreign component auditors to complete their audits of the company.