Court moves to drop fraud convictions in KPMG US audit scandal
New York | Two people found guilty in a corruption scandal involving KPMG US and the US audit regulator will have their convictions dropped, after prosecutors conceded they had misinterpreted the law.
David Middendorf, a former KPMG US managing partner for audit quality, and Jeffrey Wada, who worked at the US Public Company Accounting Oversight Board, were convicted of fraud over claims that Mr Wada passed confidential information to KPMG to help the firm prepare for PCAOB audit inspections, in the hope of being given a job at the big four firm.
Two people found guilty in a corruption scandal involving KPMG US and the US audit regulator are set to have their convictions dropped. Bloomberg
The Department of Justice conceded this week in a court filing that its reading of wire fraud statutes was incorrect, in light of subsequent legal judgments in unrelated cases. It said it would ask for the jury verdict to be set aside and the charges dismissed.
Another KPMG audit quality partner, David Britt, who was deported to Australia after pleading guilty to a similar charge, is now planning to ask the court to allow him to reverse his plea so he can return to the US, his lawyer told the Financial Times.
Mr Middendorf and Mr Britt were among six partners and employees, including the head of the audit practice, who were fired by KPMG in 2017 after revelations it had hired multiple people from the PCAOB and used its contacts there to receive advance notice of which audits would be subject to inspection. The firm had been wrestling with persistently low audit quality scores from the inspection process.
KPMG later paid $US50 million ($76 million) in a settlement with the Securities and Exchange Commission, which oversees the PCAOB,
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