Refer to the Why It Matters feature “KPMG Fires Five Audit Partners and the Head of Its Audit Practice.” Recall that this incident initially involved a former and a current PCAOB employee, with the latter sup- plying information about upcoming PCAOB inspections of various KPMG audit client engagements. The incident could have stopped there, if the KPMG employee either did not act upon the information, or s/he notified a superior, who then did the right thing and notified the PCAOB of the breach. Of course, we now know that the chain of events did not stop there. Instead, the breached information made its way up the organization all the way to Scott Marcello, the head of the entire audit practice of KPMG.
a. How, if at all, could the PCAOB have internal controls in place to prevent an employee from leaking inspection information?

b. How, if at all, could KPMG have internal controls in place to prevent a former PCAOB employee who now works for the Firm have inappropriate communication with current PCAOB employees?

c. What changes can you think of that could prevent a breach such as this?

d. Scott Marcello had a 38-year career with KPMG, and now he has been disgraced and fired. Speculate as to his potential incentives and rationalizations.