. . KPMG has zero tolerance for such unethical behavior, said Lynne Doughtie, KPMG's chairman and...

  

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. . "KPMG has zero tolerance for such unethical behavior," said Lynne Doughtie, KPMG's chairman and CEO She also commented that the firm is "taking additional steps to ensure that such a situation should not happen again." Five KMPG partners were charged with conspiracy and wire fraud related to receiving confidential information related to planned PCAOB inspections of the firm's audits. A sixth KPMG employee had previously pled guilty to conspiracy and has been permanently barred from auditing public company financial statements. . In response to the leak, the PCAOB has indicated that it would conduct a review of its information technology and security controls and its ethical protocols for employees. It has been alleged that Brian Sweet (a former PCAOB employee) was hired by KPMG at a time when their audit deficiency rate was high (46%). As a result, it has been alleged that KPMG made his hiring a "top priority" given the pressure from firm leadership to improve audit inspection results. Additional Information: This situation involved some of the highest-ranking partners in KPMG's audit quality area. Specifically, in April 2017, KPMG fired Mr. Scott Marcello, who had been the firm's Vice Chairman of audit, the firm's top executive that is responsible for the entire audit practice. In addition, KPMG also fired Mr. David Middendorf, who had been the firm's national managing partner for audit quality and professional practice. Mr Marcello has not been charged but Mr. Middendorf is being charged As a result of this situation, the PCAOB is now mandating that senior inspection staff can't seek employment with an audit firm that they are responsible for inspecting for at least a year The firm was under a substantial amount of pressure to improve their inspection Additional Information: . . This situation involved some of the highest-ranking partners in KPMG's audit quality area. Specifically, in April 2017, KPMG fired Mr. Scott Marcello, who had been the firm's Vice Chairman of audit, the firm's top executive that is responsible for the entire audit practice. In addition, KPMG also fired Mr. David Middendorf, who had been the firm's national managing partner for audit quality and professional practice. Mr. Marcello has not been charged but Mr. Middendorf is being charged Discussion Questions: Based on the facts above, please answer the following questions. . Do you think that the "fraud triangle" can be applied to this situation? Please provide a detailed explanation Do you believe that the employees at KPMG should be facing criminal charges for their actions? Or, is termination enough of a punishment? Please provide a detailed explanation Do you believe that the cooling off period of one year imposed by the PCAOB is enough time? Why or why not? As a result of this situation, the PCAOB is now mandating that senior inspection staff can't seek employment with an audit firm that they are responsible for inspecting for at least a year. The firm was under a substantial amount of pressure to improve their inspection results. . . "KPMG has zero tolerance for such unethical behavior," said Lynne Doughtie, KPMG's chairman and CEO She also commented that the firm is "taking additional steps to ensure that such a situation should not happen again." Five KMPG partners were charged with conspiracy and wire fraud related to receiving confidential information related to planned PCAOB inspections of the firm's audits. A sixth KPMG employee had previously pled guilty to conspiracy and has been permanently barred from auditing public company financial statements. . In response to the leak, the PCAOB has indicated that it would conduct a review of its information technology and security controls and its ethical protocols for employees. It has been alleged that Brian Sweet (a former PCAOB employee) was hired by KPMG at a time when their audit deficiency rate was high (46%). As a result, it has been alleged that KPMG made his hiring a "top priority" given the pressure from firm leadership to improve audit inspection results. Additional Information: This situation involved some of the highest-ranking partners in KPMG's audit quality area. Specifically, in April 2017, KPMG fired Mr. Scott Marcello, who had been the firm's Vice Chairman of audit, the firm's top executive that is responsible for the entire audit practice. In addition, KPMG also fired Mr. David Middendorf, who had been the firm's national managing partner for audit quality and professional practice. Mr Marcello has not been charged but Mr. Middendorf is being charged As a result of this situation, the PCAOB is now mandating that senior inspection staff can't seek employment with an audit firm that they are responsible for inspecting for at least a year The firm was under a substantial amount of pressure to improve their inspection Additional Information: . . This situation involved some of the highest-ranking partners in KPMG's audit quality area. Specifically, in April 2017, KPMG fired Mr. Scott Marcello, who had been the firm's Vice Chairman of audit, the firm's top executive that is responsible for the entire audit practice. In addition, KPMG also fired Mr. David Middendorf, who had been the firm's national managing partner for audit quality and professional practice. Mr. Marcello has not been charged but Mr. Middendorf is being charged Discussion Questions: Based on the facts above, please answer the following questions. . Do you think that the "fraud triangle" can be applied to this situation? Please provide a detailed explanation Do you believe that the employees at KPMG should be facing criminal charges for their actions? Or, is termination enough of a punishment? Please provide a detailed explanation Do you believe that the cooling off period of one year imposed by the PCAOB is enough time? Why or why not? As a result of this situation, the PCAOB is now mandating that senior inspection staff can't seek employment with an audit firm that they are responsible for inspecting for at least a year. The firm was under a substantial amount of pressure to improve their inspection results.

Answer rating: 100% (QA)

Answer 1 Yes Fraud triangle can be applied to this case There is an Opportunity for Brian sweet for ... View the full answer