KPMG, one of the 'Big Four' auditors, has settled with the SEC to pay $6.2MN for improperly auditing the financial statements of an oil and gas company.
How much of an overvaluation? 100 times more to be exact.
"KPMG retained a new client and failed to grasp how it valued oil and gas properties, resulting in investors being misinformed that properties purchased for less than $5MN were worth a half-billion dollars." stated Walter E. Jospin, Director of Atlanta's SEC Regional Office.
KPMG has not admitted to any wrongdoing and has agreed to waive the $4.6MN in audit fees from Miller Energy, and pay a $1MN penalty with $558,319 in interest. They also have agreed to overhaul their quality control system for audits. John Riordan was also cited as an engagement partner between the two companies, and was stated to be "engaged in improper professional conduct" on behalf of the audit. He must pay a $25,000 penalty and is suspended from acting as an accountant for a minimum of two years.
Miller Energy had been charged with accounting fraud in 2015 stemming from the improper audit, and settled with the SEC at that time.
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