An investigation by US watchdog the Securities & Exchange Commission has
seen two former partners and a senior manager at KPMG relinquish their
accounting licenses in relation to their audit work at Tenet Healthcare
Corporation in 2002.
Clete D. Madden, age 45, of Dallas, Texas, the KPMG partner in charge of the
audit, David L. Huffman, age 40, of Apopka, Florida, the KPMG senior manager on
audit and Aron R. Carr, age 30, of Dallas, Texas, a former KPMG manager, were
charged with failing to properly to complete the audit of Tenet Healthcare
Corporation’s for its 2002 financial year and for making ‘after-the-fact
modifications to the audit working papers which created the false impression
that the audit had been adequately performed’.
The SEC found that the improper modifications included adding substantive
comments to the working papers, backdating documents, and creating audit
documentation occured after the fact. The commission further found that certain
of the improper modifications occurred even after the issuance of a subpoena to
KPMG by commission investigators.
Without admitting or denying the commission’s findings, Madden, Huffman, and
Carr settled the charges by agreeing to relinquish their rights to practice as
Huffman may apply for reinstatement after four years while Carr may apply for
reinstatement after three years.
‘By failing to perform a proper audit and then altering documents, thereby
concealing their audit failures, the KPMG auditors were derelict in their most
basic gatekeeping functions,’ said Linda Chatman Thomsen, director of the SEC’s
Division of Enforcement.
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