KPMG auditors to face SEC over Ahold

KPMG auditors to face SEC over Ahold

Watchdog says they should have acted on warning signs

Two KPMG audit partners have been charged with ‘improper professional
conduct’ by the Securities & Exchange Commission in their audit of US
Foodservice Inc, a subsidiary of Dutch company Royal Ahold.

Charges will be brought against KPMG partner Kevin Hall and senior manager
Rosemary Meyer, according to reports from the US.

The SEC allege that even though both auditors identified or had evidence of
accounting problems with US Foodservice’s 1999 financial statements, they
ignored irregularities and failed to clarify inconsistencies or bring problems
to the attention of the company’s audit committee.

The allegations made by the watchdog will go before an administrative law
judge giving Hall and Meyer a chance to defend themselves, and for the judge to
decide whether they should be censured by the commission or temporarily or
permanently barred from acting as auditors.

In February 2002, Ahold admitted that it overstated its profits by at least
$500m (£317m), with the error primarily related to US Foodservice.

A KPMG spokesman, quoted in the Washington Post, said both partners
were looking forward to ‘presenting the facts in support of the work that was
performed’.

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