$200 Million Later, KPMG Settles With Rite Aid, Oxford Shareholders

Big Four accounting firm KPMG has agreed to pay $125 million as a result of a class action lawsuit filed by shareholders of Rite Aid, the nation's third-largest drugstore chain. The action resulted from allegations that officers of the drugstore company made false statements to shareholders in published financial statements for the purpose of driving up the price of the company stock. The financial statements in question, which were audited by KPMG, were for fiscal years 1997 through 1999. Indictments are pending against four Rite Aid executives.

KPMG stated that the firm resigned from its audit of Rite Aid in 1999 after alerting Rite Aid's audit committee of weaknesses in the company's internal audit controls.

In addition, KPMG has agreed to pay $75 million to shareholders of Oxford Health Plans after a computer snafu at Oxford in 1977 resulted in collection and payment delinquencies. KPMG was accused in the lawsuit of giving a false and misleading opinion.

KPMG denies wrongdoing in both cases and states that it agreed to the settlements "for practical business reasons."

You may like these other stories...

Here's a CPA who truly walks the walk. On March 15, Frank Ryan, CPA, departed San Diego, California, with plans to be in Ocean City, Maryland, by July 2 to teach a course at the Maryland Association of CPAs’ (MACPA...
When Theodore J. Flynn first joined the Massachusetts Society of CPAs (MSCPA) in 1970, it was a different world and a different profession.  The "Big Eight" were still headquartered in Boston. Vietnam War...
Accountant Rickey Charles Goodrich had it a little too good. Many bean counters would kill to serve as financial guru to the likes of Pearl Jam. Goodrich was hired in 2005, and the following year, he became the CFO of Curtis...

Already a member? log in here.

Upcoming CPE Webinars

Aug 28
Excel spreadsheets are often akin to the American Wild West, where users can input anything they want into any worksheet cell. Excel's Data Validation feature allows you to restrict user inputs to selected choices, but there are many nuances to the feature that often trip users up.
Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
Sep 10
Transfer your knowledge and experience to prepare your team for the challenges and opportunities of an accounting career.
Sep 11
This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.