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Fitchburg State University
KPMG Deficient Audits
Olivia Johnson
Auditing BSAD 4140
Professor Hollingsworth
April 27, 2018
Introduction
Strong ethics are required of all accountants, auditors and anyone else who works in the
accounting profession for the sake of independence and competency. An accounting professional
could have multiple motives for acting deceitfully, but when someone’s moral compass is
compromised, it can only lead to unethical behavior. The accounting profession as a whole is aware
that there will be bad actors and that is why the Securities and Exchange Commission (SEC) has
policies strictly outlining what is right and what is wrong. Two recent administrative proceedings
from the SEC show a clear example of what occurs when ethics are forgone in the accounting
industry and what the motivation of the bad actors in these two cases might have been.
Summary of Area of Auditing
The two Administrative Proceedings referenced by File No. 3-18346 and File No. 3-18347,
dated January 22, 2018, inform the public of the wrongdoings committed by six different CPAs.
It is important to understand the relationship between Public Company Accounting Oversight
Board and firms like KPMG, which are both involved in these proceedings. The Public Company
Accounting Oversight Board (PCAOB), a branch of the SEC, was created in the year 2002 as part
