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2013_KPMG

2013_KPMG

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Published by Caleb Newquist
2012 PCAOB inspection report for KPMG
2012 PCAOB inspection report for KPMG

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Categories:Types, Business/Law
Published by: Caleb Newquist on Aug 28, 2013
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09/12/2013

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1666 K Street, N.W.Washington, DC 20006 Telephone: (202) 207-9100Facsimile: (202) 862-8433www.pcaobus.org
Report on2012 Inspection of KPMG LLP
 
(Headquartered in New York, New York)Issued by the
Public Company Accounting Oversight Board
July 30, 2013
PCAOB RELEASE NO. 104-2013-147
THIS IS A PUBLIC VERSION OF A PCAOB INSPECTION REPORTPORTIONS OF THE COMPLETE REPORT ARE OMITTEDFROM THIS DOCUMENT IN ORDER TO COMPLY WITHSECTIONS 104(g)(2) AND 105(b)(5)(A)OF THE SARBANES-OXLEY ACT OF 2002
 
 PCAOB Release No. 104-2013-147
2012 INSPECTION OF KPMG LLP
PrefaceIn 2012, the Public Company Accounting Oversight Board ("PCAOB" or "theBoard") conducted an inspection of the registered public accounting firm KPMG LLP("the Firm") pursuant to the Sarbanes-Oxley Act of 2002 ("the Act").
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  The inspection process is designed, and inspections are performed, to provide abasis for assessing the degree of compliance by a firm with applicable requirementsrelated to auditing issuers. The inspection process included reviews of aspects of selected issuer audits completed by the Firm. The reviews were intended to identifywhether deficiencies existed in those aspects of the audits, and whether suchdeficiencies indicated defects in the Firm's system of quality control over audits. Inaddition, the inspection included reviews of policies and procedures related to certainquality control processes of the Firm that could be expected to affect audit quality. The issuer audits and aspects of those audits inspected were selected based ona number of risk-related and other factors. Due to the selection process, the deficienciesincluded in this report are not necessarily representative of the Firm's issuer auditpractice.
 
 The Board is issuing this report in accordance with the requirements of the Act.
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  The Board is releasing to the public Part I of the report and portions of Appendix C.Appendix C includes the Firm's comments, if any, on a draft of the report. Any defectsin, or criticisms of, the Firm's quality control system are discussed in the nonpublicportion of this report and will remain nonpublic unless the Firm fails to address them tothe Board's satisfaction within 12 months of the date of this report.
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The Act requires the Board to conduct an annual inspection of eachregistered public accounting firm that regularly provides audit reports for more than 100issuers.
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In its
Statement Concerning the Issuance of Inspection Reports
, PCAOBRelease No. 104-2004-001 (August 26, 2004), the Board described its approach tomaking inspection-related information publicly available consistent with legalrestrictions.
 
 PCAOB Release No. 104-2013-147Inspection of KPMG LLP July 30, 2013Page 2
PART IINSPECTION PROCEDURES AND CERTAIN OBSERVATIONS
Members of the Board's staff ("the inspection team") conducted primaryprocedures for the inspection from October 2011 through February 2013. Theinspection team performed field work at the Firm's National Office and at 28 of itsapproximately 83 U.S. practice offices.
 A. Review of Audit Engagements
 The 2012 inspection of the Firm included reviews of aspects of 48 auditsperformed by the Firm and reviews of the Firm's audit work on two other issuer auditengagements in which the Firm played a role but was not the principal auditor. Theinspection team identified matters that it considered to be deficiencies in theperformance of the work it reviewed. One of the deficiencies relates to auditing aspectsof an issuer's financial statements that the issuer announced an intention to restate afterthe primary inspection procedures. The inspection team considered certain of the deficiencies that it observed to beaudit failures. Specifically, certain of the identified deficiencies were
 
of such significancethat it appeared that the Firm, at the time it issued its audit report, had failed to obtainsufficient appropriate audit evidence to support its audit opinion on the financialstatements and/or on the effectiveness of internal control over financial reporting("ICFR"). In addition, in two audits in which the Firm played a role but was not theprincipal auditor, the inspection team identified deficiencies that were of suchsignificance that it appeared that the Firm had not obtained sufficient appropriate auditevidence to fulfill the objectives of its role in the audit. The audit deficiencies thatreached these levels of significance are described below.
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The discussion in this report of any deficiency observed in a particularaudit reflects information reported to the Board by the inspection team and does notreflect any determination by the Board as to whether the Firm has engaged in anyconduct for which it could be sanctioned through the Board's disciplinary process. Inaddition, any references in this report to violations or potential violations of law, rules, orprofessional standards are not a result of an adversarial adjudicative process and donot constitute conclusive findings for purposes of imposing legal liability.

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