• Register
Return to: Home > News > Former PCAOB and KPMG USA staff charged for leaking inspection information

Former PCAOB and KPMG USA staff charged for leaking inspection information

The USA Securities and Exchange Commission (SEC) have charged six public accountants, including three former employees of the Public Company Accounting Oversight Board (PCAOB) and three KPMG USA employees, for leaking confidential inspection information to the network.

The misconduct began in 2015 until February 2017, where former PCAOB supervisor Brian Sweet began working for KPMG but continued accessing materials through PCAOB inspector Cynthia Holder, who also joined KPMG and continued access through PCAOB employee Jeffrey Wada. Wada then leaked PCAOB data at the time he was seeking employment with KPMG, according to the SEC.

Sweet informed supervisors of the confidential materials; KPMG managing partner for audit quality and professional practice David Middendorf, national inspections partner Thomas Whittle, and partner David Britt. All three allegedly encouraged sharing the stolen information so that audit papers of client who would be inspected could be revised to avoid negative findings. Both Middendorf and Whittle allegedly instructed not to disclose that they had confidential PCAOB information.

SEC's Enforcement Division co-director Steven Peikin said they literally stole the exam. “The PCAOB inspections program is meant to assess whether firms are cutting corners, compromising their independence, or otherwise falling short in their responsibilities. The SEC cannot tolerate any scheme to subvert that important process," he said.

PCAOB chairman William Duhnke said that following the discovery last year the Board and staff have reviewed and reinforced safeguards. “The new PCAOB Board will conduct an ongoing review into information technology and security controls, as well as its compliance and ethics protocols, to assess their effectiveness. The misappropriation of confidential PCAOB information or otherwise undermining the integrity of our programs will not be tolerated,” he said.

Sweet has agreed to settle a commission order requiring he cease and desist from violating PCAOB ethics and barring him from appearing or practicing before the SEC as an accountant.

A KPMG statement said: “When KPMG first discovered the issue in early 2017, we promptly notified the authorities and have been fully cooperating with the Government in its investigation.  KPMG took swift and decisive action, including the engagement of outside legal counsel to conduct a detailed investigation and the separation of involved individuals from the Firm. Since then KPMG has taken remedial actions to assure that such conduct cannot happen again.”

Parallel to the SEC’s charges, the USA Attorney's Office for the Southern District of New York has announced criminal charges against the six accountants. The case will be scheduled for a public hearing.

Top Content

    Accountancy Europe: the winner takes it all

    Jonathan Minter spoke to Olivier Boutellis-Taft, chief executive officer at Accountancy Europe, about how technology could change the industry, and how training needs to keep up to enable the profession to develop

    read more

    Embracing global technology trends

    Accountancy Europe’s Digital Day 2018 found the European accounting profession looking to tackle the challenges presented by new technologies head on. Jonathan Minter reports from the day

    read more

    IMA Conference: automation of the audit

    At the annual conference of the Institute of Management Accountants (IMA) in Indianapolis, Deloitte partner Alex Smith gave a presentation on digital transformation in the profession. Joe Pickard spoke to Smith following the presentation to find out more about his views on the future of audit

    read more

    IMA Conference: technology and the human effect

    The annual conference of the Institute of Management Accountants (IMA) took place in Indianapolis this year. Members of the profession gathered to hear the latest from the institute and other market players, covering some of the challenges and opportunities the profession faces.

    read more

    The Caribbean: a digital paradise

    The ICAC hosted its 36th annual conference in June this year – very much looking to the future following a tough 2017 for the Caribbean. Jonathan Minter spoke with chief executive officer Misha Lobban Clarke

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.