On the heels of KPMG’s settlement with the Securities and Exchange Commission (SEC) over their auditing of Xerox, Eugene O’Kelly, chief executive of KPMG’s US business, told the Financial Times that he was considering the case for issuing annual accounts, adding that action by lawmakers to limit auditors’ liability could make the move possible.
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Unlike accounting firms in the UK, US firms only detail their annual revenues, leaving them open to criticism that they need to increase their financial transparency. KPMG has gone farther than other US firm by releasing regulator’s conclusions on their audit work in 2004 and limited information about partner income earlier this year.
Since becoming chief executive in 2002, O’Kelly has proven himself a leading in seeking reforms within KPMG and the American accounting industry. KPMG is changing its work practice, strengthening whistle-blower procedures, and reviewing any instances when a lead audit partner is moved off an assignment for any reason, as part of the Xerox settlement. O’Kelly, however, goes farther, believing that liability reform is necessary to prevent another scandal from bringing down another large accounting firm the way the Enron scandal brought down Anderson.
Despite O’Kelly reform efforts, the Department of Justice continues its investigation into KPMG’s sales of tax avoidance schemes, according to the Financial Times. The Senate’s permanent sub-committee on investigations reported in February that KPMG sold potentially abusive tax shelters from 1998 to 2003. The report also acknowledged that the firm had stopped such practices.
“I feel very good about our processes and procedures compared to the competition. We have had a strategy to resolve our matters quickly [with regulators] and I would not trade our portfolio for that of my competitors,” O’Kelly told the Financial Times.