Statement of Donald Nicolaisen, SEC Chief Accountant, Regarding KPMG LLP Agreement with the U.S. Department of Justice
KPMG LLP entered a deferred prosecution agreement with the DOJ over illegal tax‑shelter services, agreed to pay $456 million in penalties and to overhaul its tax practice under monitor Richard Breeden.
KPMG LLP reached a deferred prosecution agreement with the U.S. Department of Justice concerning abusive tax‑shelter schemes run by its tax practice. Under the deal KPMG will pay $456 million in penalties—including criminal fines and restitution—and will restructure its tax unit and strengthen internal controls. Former SEC Chairman Richard Breeden was appointed as an independent monitor, and the SEC’s chief accountant noted the conduct was unacceptable but did not involve securities‑law violations.
In August 2005 the Securities and Exchange Commission’s chief accountant announced that KPMG LLP had entered into a deferred prosecution agreement with the U.S. Department of Justice to resolve allegations that its tax practice designed and promoted illegal tax‑shelter schemes. The misconduct occurred outside KPMG’s audit work and did not violate federal securities laws, but the firm acknowledged wrongdoing and agreed to pay $456 million in penalties, comprising criminal fines and restitution. KPMG also pledged to cease providing the offending tax services, to restructure its tax practice, and to implement stronger supervision and internal controls. Former SEC Chairman Richard Breeden was appointed as an independent monitor to oversee compliance for a three‑year period. The agreement was described by the SEC as appropriately significant, and the PCAOB said it would continue to assess KPMG’s ability to audit public companies. KPMG’s cooperation and the penalties aim to prevent future abusive tax‑shelter activities and restore confidence in the firm’s professional standards.
Extracted insights
- company a deferred prosecution agreement with kpmg llp
- person david kelley
- agency Department of Justice
- agency former sec chairman richard breeden to monitor the firm's compliance
- company kpmg llp
- U.S. Department Of Justice entered into a deferred prosecution agreement with KPMG LLP
- KPMG LLP stopped providing the types of tax services addressed in this case
- KPMG LLP made significant changes in the structure and operation of the tax practice
- David Kelley appointed former SEC Chairman Richard Breeden to monitor the firm's compliance
- PCAOB is issuing a statement on KPMG's ongoing ability to perform audits of public companies
- DOJ reached an agreement with KPMG to resolve the issues under investigation
STATEMENT OF DONALD NICOLAISEN, SEC CHIEF ACCOUNTANT, REGARDING KPMG LLP AGREEMENT WITH THE U.S. DEPARTMENT OF JUSTICE FOR IMMEDIATE RELEASE 2005-122 Washington, D.C., August 29, 2005 - Donald T. Nicolaisen, Chief Accountant for the Securities and Exchange Commission, today made the following statement regarding the KPMG LLP agreement with the U.S. Department of Justice: "Earlier today the U. S. Department of Justice announced that they have entered into a deferred prosecution agreement with KPMG LLP that addresses issues stemming from past services provided by KPMG's tax practice. KPMG has represented that it has stopped providing the types of tax services addressed in this case and that it has made significant changes in the structure and operation of the tax practice of the firm, and the supervision of that practice, in order to avoid similar issues in the future. The agreement by KPMG provides a comprehensive and forward-looking framework for addressing the violations identified by DOJ, which do not arise under the federal securities laws. In addition, pursuant to the agreement, the United States Attorney for the Southern District of New York, David Kelley, appointed former SEC Chairman Richard Breeden to monitor the firm's compliance with the terms of the agreement. The PCAOB has advised me that it is issuing a statement on KPMG's ongoing ability to perform audits of public companies based on its annual inspections of KPMG's auditing work. "I am pleased that DOJ and KPMG have reached an agreement to resolve the issues under investigation by DOJ. I believe that the past conduct described in the agreement was unacceptable and the resulting penalties are appropriately significant. The agreement addresses tax shelter activities outside KPMG's audit practice and does not require or call for Commission action. Commission staff will of course monitor the situation in view of the Commission's responsibilities to investors and markets." http://www.sec.gov/news/press/2005-122.htm Home | Previous Page Modified: 08/29/2005
STATEMENT OF DONALD NICOLAISEN, SEC CHIEF ACCOUNTANT, REGARDING KPMG LLP AGREEMENT WITH THE U.S. DEPARTMENT OF JUSTICE FOR IMMEDIATE RELEASE 2005-122 Washington, D.C., August 29, 2005 - Donald T. Nicolaisen, Chief Accountant for the Securities and Exchange Commission, today made the following statement regarding the KPMG LLP agreement with the U.S. Department of Justice: "Earlier today the U. S. Department of Justice announced that they have entered into a deferred prosecution agreement with KPMG LLP that addresses issues stemming from past services provided by KPMG's tax practice. KPMG has represented that it has stopped providing the types of tax services addressed in this case and that it has made significant changes in the structure and operation of the tax practice of the firm, and the supervision of that practice, in order to avoid similar issues in the future. The agreement by KPMG provides a comprehensive and forward-looking framework for addressing the violations identified by DOJ, which do not arise under the federal securities laws. In addition, pursuant to the agreement, the United States Attorney for the Southern District of New York, David Kelley, appointed former SEC Chairman Richard Breeden to monitor the firm's compliance with the terms of the agreement. The PCAOB has advised me that it is issuing a statement on KPMG's ongoing ability to perform audits of public companies based on its annual inspections of KPMG's auditing work. "I am pleased that DOJ and KPMG have reached an agreement to resolve the issues under investigation by DOJ. I believe that the past conduct described in the agreement was unacceptable and the resulting penalties are appropriately significant. The agreement addresses tax shelter activities outside KPMG's audit practice and does not require or call for Commission action. Commission staff will of course monitor the situation in view of the Commission's responsibilities to investors and markets." http://www.sec.gov/news/press/2005-122.htm Home | Previous Page Modified: 08/29/2005