KPMG to face charges over Xerox
Big Four firm KPMG has been charged with fraud by the US Securities & Exchange Commission in connection with its audits of office equipment company Xerox.
Link: KPMG faces possible action over Xerox
The SEC said on Wednesday it was suing KPMG LLP and four KPMG partners in connection with the audits of Xerox from 1997 through 2000.
The firm and the four partners have been charged with fraud and the SEC said it would seek ‘injunctions, disgorgement of all fees and civil money penalties’.
The partners named as defendents are: Michael A. Conway, 59, of Westport, Connecticut, senior professional practice partner who went on to become the lead worldwide Xerox engagement partner for the 2000 audit, Joseph T. Boyle, 59, from New York City, managing partner of the New York office, Anthony P. Dolanski, 56, from Malvern, Pennsylvania and Ronald A. Safran, 49, a resident of Darien, Connecticut, lead engagement partner on the 1998 and 1999 Xerox audits.
In a statement the SEC alleges that ‘KPMG and its partners permitted Xerox to manipulate its accounting practices to close a $3bn “gap” between actual operating results and results reported to the investing public’.
But KPMG has denied any wrongdoing. The firm said the SEC had made a number of unsubstantiated claims.
‘The action is clearly an injustice to KPMG and the four partners involved,’ the firm said in a statement.
Last year Xerox agreed to restate its accounts for 1997 to 2000, adjust its 2001 results and pay a record $10m civil settlement, although it neither accepted nor denied the allegations.
An audit carried out by PwC, which replaced KPMG as auditor of Xerox in October 2001, found that the company had exaggerated its figures for the past five years by £3.9bn