News Yesterday
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The American regulator PCAOB has imposed a record fine of 25 million dollars on KPMG Netherlands for the way in which the firm dealt with large-scale exam fraud. The fines seem to be a nice revenue model for the regulator, according to the PCAOB’s annual report.
Wilbert Geijtenbeek
The regulator’s 2023 annual accounts have not yet been published, but it is certain that the record has been broken again with the fines announced by the PCAOB. The four fines imposed in 2023 on PwC Hong Kong, PwC China, PwC Greece and the American office Marcum LLP alone add up to $13 million.
Fine amounts
KPMG Netherlands has the dubious honor of breaking that record again and emphatically in 2024, with the settlement of 25 million dollars. Recent press releases from the PCAOB list the twelve largest fines imposed on accounting firms find. These are the sanction amounts for the past two years:
$25 million for it
$4 million for exam fraud.
$4 million for exam fraud.
$3 million for exam fraud.
$3 million for violation of PCAOB rules for audit.
$3 million for violation of PCAOB rules and quality standards.
$2.75 million for mixing audit and consulting.
$2.6 million for exam fraud.
$2 million for violation of PCAOB rules and quality standards.
$1 million for exam fraud.
$1 million for exam fraud.
$1 million for exam fraud.
Revenue model
The accounting watchdog therefore found a revenue model in imposing fines for exam fraud, or so it seems. Every year, the PCAOB collects approximately $300 million in support fees paid by U.S. accounting firms. The fines, which are recorded under other income, are collected by the department enforcementwhich accounts for a cost of $24 million in the most recently published annual accounts.
That the fine revenues are a direct result of the efforts of the enforcement team is evident from the explanation: “As a result of our enhanced enforcement efforts in 2022 compared to 2021, our monetary penalties increased accordingly.“
The settlement with KPMG gives the Netherlands the honor of making the operation of the American fine trailers profitable as early as April. But in practice, the PCAOB does not use the fines for that purpose. In accordance with the Sarbanes Oxley rules, fine amounts are determined by the regulator applied for scholarships in the field of accountancy.
Pay quickly
KPMG is expected to pay the $25 million settlement amount within ten days of the settlement date (April 10), according to the official order of the PCAOB. This means an amount of $158,000 per Dutch KPMG partner. calculated the FD soon.
By order of the PCAOB, KPMG is not allowed to contact an insurer for the imposed fine or deduct the amount from taxes, according to the American regulator.
