KPMG fined £4.8m over Miller Energy audit

KPMG fined £4.8m over Miller Energy audit

KPMG issued an unqualified report of Miller Energy’s financial statements, despite the fact that the company grossly overstated the value of certain assets, and counted some twice

The US Securities and Exchange Commission (SEC) has fined KPMG $6.2m (£4.8m) over its audit of Miller Energy Resources.

The US regulator said that KPMG issued an unqualified report of Miller Energy’s 2011 financial statements, despite the fact that the oil and gas company grossly overstated the value of certain assets, and counted some assets twice. This led to investors being misinformed about the company’s value.

This follows on from an SEC investigation of Miller Energy that found the company had overvalued Alaskan oil wells it purchased for $4.5m at $480m. This fraudulent arrangement led to the energy company being listed on the New York Stock Exchange.

The SEC stated that KPMG and John Riordan, KPMG’s engagement partner, failed to properly assess the risks and did not provide adequate staff.

KPMG and Riordan do not admit or deny any wrongdoing, but have accepted to settle charges.

KPMG have agreed to be censured and will pay a $6.2m (£4.8m) fine which consists of $4.6m in disgorgement of all audit fees received, $558,319 in interest and a $1m penalty. Riordan will pay a $25,000 fine and will be suspended from practicing before the SEC as an accountant. He may apply for reinstatement in two years.

In 2015 Miller Energy was charged with accounting fraud and reached a settlement paying the SEC a $5m penalty.

This follows a series of audit scandals involving the top firms. An in depth report from the Financial Reporting Council (FRC) earlier this year found, there is much room for improvement in audit quality of the top 6 firms.

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

Professional Services Why Professional Services Firms Should Ditch Folders and Embrace Metadata

8m

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

1y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine

Accounting Firms Turn Accounts Payable into a value-engine

7m

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021

Making Tax Digital Digital Links: A guide to MTD in 2021

8m

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource