US audit watchdog hits former KPMG exec with largest ever fine for role in leaked info scandal
The body that regulates the US audit industry has fined a former KPMG executive $100,000, after pledging to crack down on “top-level personnel” in America’s biggest accountancy firms.
The US Public Company Accounting Oversight Board (PCAOB) issued a $100,000 fine to former KPMG vice chair of audit Scott Marcello, over his failure to prevent senior KPMG staff from using information leaked from the watchdog to improve KPMG’s inspection results.
The PCAOB said Marcello failed to take appropriate action after being informed by a subordinate that senior KPMG staff had gotten hold of “highly confidential” PCAOB information, which they planned to use to improve their inspection scores.
The fine comes after Marcello and five other KPMG employees were fired from the Big Four auditor in 2017, after the firm found staff had obtained leaked information as to which of KPMG’s audits the PCAOB planned to inspect.
Former KPMG executive David Middendorf was also sentenced to a year and a day in prison for his role in the leaking scheme.
“Knowing that his subordinates may have been involved in unethical or illegal behavior, Mr. Marcello failed to take steps required of someone in his position,” PCAOB director Patrick Bryan said.
The audit watchdog’s chair Erica Williams said the decision to fine Marcello a record sum, sits in line with the body’s commitment “to sanctioning top-level personnel at the largest firms when they fail to take sufficient supervisory steps aimed at preventing violations by their subordinates”.
“This action sends a strong message that firm leadership must take their supervisory responsibilities seriously,” Bryan added.