KPMG may face US criminal charges

KPMG may face criminal charges in the US that could threaten its future, the
Wall Street Journal reported earlier today.

Link: FDs
targeted as war on avoidance gets personal

The Big Four accountancy firm is facing allegations that it sold illegal tax
schemes between 1996 and 2002. Government officials are reportedly debating
whether or not to push ahead with an indictment for fear of killing off one of
the remaining Big Four firms.

KPMG has issued a statement on the allegations. It says: ‘It has been public
knowledge that since February 2004, the Department of Justice has been
investigating certain tax services that were offered by the firm during the 1996
– 2002 time period.

‘This is part of a larger tax shelter investigation into the role of
accounting firms, law firms, large banks and taxpayers who participated in the
development, promotion and implementation of tax shelters. 

‘KPMG takes full responsibility for the unlawful conduct by former KPMG
partners during that period, and we deeply regret that it occurred. 

‘In order to ensure that this type of conduct does not occur again, KPMG has
taken the following actions: 

* We no longer provide the services in question. 

* We have put in place a process to ensure that those responsible for
wrongdoing have been separated from the firm. 

* KPMG has instituted firm-wide structural, cultural and governance reforms
to ensure the highest ethical standards. 

* KPMG has undertaken significant change in its business practices. 

‘We remain in discussions with the Department of Justice and continue to
cooperate fully in its investigation. KPMG looks forward to a resolution that
recognises the significant reforms the firm has already made in response to this
matter while appropriately sanctioning the firm for this wrongdoing.

‘We take this matter very seriously and seek to resolve it fairly and

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