KPMG Concerns Lead to Client Management Changes

The CFO of a leading health services provider lost his job last week after he asked his company’s auditor to provide a representation letter concerning their ongoing review of the company’s financial statements and disclosures.

Universal Health Services announced Thursday night that the board of directors had voted to dismiss Kirk Gorman, chief financial officer since 1987, at the request of KPMG, which had recently replaced Arthur Andersen as the company’s auditing firm.

Gorman, who is not an accountant, wrote a letter to KPMG on Feb. 12 stating that since he was relying on the firm’s advice on technical accounting issues, he needed assurances from them as part of his due diligence. KPMG responded that Gorman’s letter raised reservations about his competence and told the board of directors that they would certify the financial statements only if Gorman were fired.

There were no disputes between Gorman and KPMG regarding accounting issues and Gorman had signed a representation letter for KPMG attesting to the accuracy of his company’s financial statements.

The day after Gorman’s dismissal Universal Health’s stock plunged to a 30-month low, prompting one analyst to say that Gorman’s firing was not in the best interest of the company’s stockholders.

You may like these other stories...

The Governmental Accounting Standards Board (GASB) on Monday defined two approaches for measuring assets and liabilities, which officials said will guide the standard-setting organization in establishing accounting and...
The criteria for reporting a discontinued operation on financial statements was revised by the Financial Accounting Standards Board (FASB) on Thursday.According to Accounting Standards Update No. 2014-08, Presentation of...
Tax writers seek Section 179 extensionTwo tax writers – representatives Pat Tiberi (R-OH) and Ron Kind (D-WI) – are seeking to extend long-term a tax break that allows small businesses to immediately deduct the...

Upcoming CPE Webinars

Apr 17
In this exciting presentation Excel expert David H. Ringstrom, CPA shares tricks that you can use with pivot tables every day. Remember, either you work Excel, or it works you!
Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.