KPMG hit by scandal in its US audits

ACCOUNTANCY giant KPMG has been forced to step down from audit contracts with two listed firms in the United States after firing one of its senior partners for passing inside information to a third party.

Shares in supplements maker Herbalife fell 3.75 per cent yesterday after the firm said KPMG would no longer conduct its audits. While both the firm and KPMG still believe the figures fairly reflect Herbalife’s performance, three years of audits will be withdrawn as KPMG’s independence had been impaired.

Shoe firm Skechers also parted ways with KPMG yesterday, blaming “misconduct by KPMG’s lead Audit Engagement Partner” on its accounts.

KPMG said late on Monday that it had fired the partner in charge of its Los Angeles audit practice, later named as Scott London, amid claims he passed non-public information to a third party, who had then traded shares based on the information.

The FBI is believed to be investigating the matter. KPMG said it “unequivocally condemn[s] this individual’s rogue actions”.

The news comes at a bad time for Herbalife, which is at the centre of a multimillion dollar fight between investors Carl Icahn and Bill Ackman.

The Big Four accountant is also under pressure in the UK over its work with failed bank HBOS.

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April 22, 2014, 2:25pm