PracticeAccounting FirmsKPMG’s UK branch unscathed

KPMG's UK branch unscathed

Big Four firm says US settlement with US Department of Justice 'has no effect' on UK operations

KPMG’s settlement with the US Department of Justice (DoJ) ‘has no effect’, on
its UK operations, the Big Four firm has said.

KPMG agreed to a $456m (£255m) fine and severe restrictions on its US tax
practice this week to atone for its role in helping individuals avoid $2.5bn in
tax.

In an extraordinary statement issued on Monday, the firm admitted to
violating the law, and said it had entered into a deferred prosecution agreement
with the DoJ over the tax shelter cases the firm had faced for the past few
months.

But restrictions on the US tax practice will not impact the UK firm’s tax
activities. The private client tax practice in the US, which will be abolished
by February 2006, had already become very small and had little or no
relationship with the UK firm.

The Public Companies Accounting Oversight Board and the Securities and
Exchanges Commission also moved to restore some trust in KPMG’s auditing,
effectively indicating that the deferred prosecution agreement would not affect
the firm’s audit licenses and hence its ability to audit big blue-chip firms.

‘The resolution of the DoJ’s investigation into the US firm’s past tax
shelter activities has no effect on KPMG International member firms outside the
US,’ the firm’s US branch said in a statement.

The deal included exceptionally stringent penalties for KPMG. It must pay
$456m over a year and a half and be monitored for three years.

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