The ongoing debacle between Livent, Inc. and KPMG continued yesterday in a Toronto court when lawyers for former Livent exec Garth Drabinsky brought a suit against the Big 5 firm for conflicts of interest.
CPAs will recall that Livent, producer of several well-known Broadway shows, including Phantom of the Opera and Ragtime, made the news in August 1998 when its new owners, investment banker Roy Furman and former Walt Disney executive Michael Ovitz, revealed that an internal audit had uncovered serious accounting irregularities. Among those involved was Drabinsky, one of two accused of $97 million in fraud.
The latest allegations focus on the fact that KPMG's Toronto and Los Angeles offices allegedly failed to disclose their involvement regarding KPMG's investigation of Livent and the firm's forensic accounting practice. Also of concern is an alleged secret retainer to help Livent reinstate its financial results.