PracticeAuditKPMG plays waiting game on MCI audit

KPMG plays waiting game on MCI audit

Big Four firm KPMG is anxiously waiting to hear whether a judge will disqualify the firm as auditor of MCI, the company reborn out of WorldCom that has shaken off the shackles of bankruptcy.

Link: WorldCom special

The motion to have the firm disqualified has been made by the Massachusetts state tax department and similar departments from 13 other US states, which have questioned the objectivity of the KPMG audit.

Judge Arthur Gonzalez, a US bankruptcy judge, has retired to consider his decision, although it is not known when he will issue his verdict.

A spokesman for KPMG confirmed the case against the firm – but declined to comment further other than to say that the judge was ‘considering whether to disqualify the firm’.

Loss of the MCI audit would be a significant blow to KPMG. The most recent 10-K annual report filing by MCI, submitted to the SEC on 12 March this year, shows that KPMG earned $146.8m (£82.1m) for its audit and tax work.

Of this, $143.5m was earned from audit and audit-related activities and the remaining $3.3m from tax work.

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