KPMG Signing Off Incomplete Audits

Lucas Gilmore, “Big 4″ observer
September 14, 2010 /

The inspector of the accounting industry has criticized KPMG for premature signing of audit forms since the work was incomplete. There were changes made in the accounts including the balance sheet in between signing and printing, the inspector charged.

There were several instances identified where statutory accounts submitted by KPMG audit team prior to issuance of technical review were found to be incomplete. Non-attendance for retailers at stock takes was also found to be a sticky area.

Performance of analytical procedures to acquire audit evidence was also identified to be inadequate. AIU detected deficiencies in at least five audits which included acceptance threshold, expectations settings and corroboration of management expectations.

KPMG was also blamed for non-identifying deficiencies in disclosures in the financial statements. This has to be reported to the audit team. Engagement letter was also not given to the audit committee on the three audits reviewed.

The AIU had been pointing out the quantum of uncertainty in the audits carried out by the Big Four particularly KPMG has been pulled up over audit evidence and judgments. In one audit such discrepancy was evident and there was lack of evidence to support the reliability of independent valuation of properties and amount of incentive payments claimed from suppliers in the accounting year.

AIU was also concerned about long associations of KMPG partners and staff placed in senior position with the audit engagement. In one of the audits, a partner involved in certain aspects of auditing, was found to be having an assuming non-audit relationship. AIU also marked several threats to the independence in the area of extended assurance service provided by KPMG.

KPMG was reported to be responding in the matter by taking appropriate action to address the same though they said that they might not have identical view as the AIU has.

 

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