Last week, it was revealed that the accounting firm had been fined US$450,000 by US watchdog the Public Company Accounting Oversight Board (PCAOB) after a review found widespread cheating by staff over a four-year period.
According to the PCAOB, more than 1,100 firm personnel were involved in “improper answer sharing” in connection with tests for mandatory training courses covering topics that included professional independence, auditing and accounting.
However, this week, the Institute of Certified Management Accountants (ICMA) has questioned why only the US regulator took action against KMPG, despite the scandal also being brought to the attention of ASIC and the Chartered Accountants of Australia and New Zealand (CA ANZ).
“Simply put, only the USA has statutory regulation of the auditing profession that is truly independent of the big four auditing firms,” ICMA CEO, Professor Janek Ratnatunga, said.
“While the auditing profession in the USA moved from peer-reviewed self-regulation to statutory regulation by the PCAOB in the wake of the accounting and auditing scandals in the early 21st century, Australia’s regulators remain toothless tigers.
“The only reason why KPMG Australia was targeted by PCAOB is that it undertakes audits on companies listed in the USA.”
Referencing a 2019 inquiry into the regulation of auditing into Australia, Professor Ratnatunga conceded ASIC had “no statutory power” to investigate KPMG, but claimed that CA ANZ did and is yet to take any action despite being informed of the matter 18 months ago.
Professor Ratnatunga renewed ICMA’s calls for the establishment of a royal commission into the accounting and auditing profession to question the need of the legislation calling for an audit and to set up an independent body which can take action against auditors should their duties not be carried out.
“Clearly, independent oversight is needed of all the professional bodies that can undertake audits such as CA ANZ, CPA Australia and the Institute of Public Accountants,” Professor Ratnatunga said.
“These bodies should come under strict independent scrutiny of their auditor training programs and professional qualifications, similar to how the Tertiary Education Quality and Standards Agency (TEQSA) reviews higher education degrees issued by universities.
“In addition, these auditing bodies must be subjected to independent statutory regulation. This is the only way to ensure that Australian reputation in corporate governance is maintained and capital markets are protected.”
I have said for years that the people missing from the Hayne Royal Commission were the big 4 accounting and top legal firms nothing our board did without their seal of approval on stuff from one of those firms. And it was not just were I worked. They also do a lot of consulting to government is it any wonder standards in ethics, conflict of interest have slipped? Meanwhile the poor Adviser has become the whipping boy or girl.
Whilst CAANZ needs to address this, accountants and lawyers execute engagement letters with their clients, do the work they say they are going to do and then raise an invoice for “the client” to willingly pay. Not sure how a Royal Commission based largely on fee for no service would have changed KPMG’s behavior.
There is a real culture of corruption, jobs for the boys etc coming into Australia. FASEA is an example…jobs jobs jobs for the Uni Sector..and the FPA can supply courses…win win for all…..We’ve seen it at the FPA that is also fundamentally corrupt, there behaviour at the Royal Commission and a Director getting consulting fees from ASIC. The FPA itself where on one hand claiming to represent Advisers but then you examine the relationship between firms like Hesta/Aware Super (previously the banks) and there Professional Partner Program…Then we’ve got the untouchable politically linked Industry Super funds claiming to be “balanced” one day then asking to be bailed out by the RBA because they’ve got less than 1% cash the next. ….and ASIC also saying “nothing to see here with AMP” ….that basically leaves only the small guy…(Dover classic example) that they kick the hell out of. That’s you.
Serious questions will now be raised over any corporation or government department which chooses KPMG as their auditor.
This is entirely consistent with ASIC’s approach of indiscriminately persecuting licensed financial advisers, while allowing accountants to get away with whatever they like. It is regulation based on bias and prejudice, rather than genuine consumer protection. ASIC is a rogue regulator.
ASIC have to protect the Industry Funds network which is a gravy train for the Labor Party.
These 1,100 employees must have been “financial advisers!”
and pigs might fly