2/25/2021 SEC Suspends Ex-KPMG Auditors for Improper Professional Conduct - WSJ

This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit
https://www.djreprints.com.

https://www.wsj.com/articles/sec-suspends-ex-kpmg-auditors-for-improper-professional-conduct-11614125649

RISK & COMPLIANCE JOURNAL

SEC Suspends Ex-KPMG Auditors for Improper

Professional Conduct
The claims stem from audit opinions of financial statements for the now-defunct College of New
Rochelle

The two former KPMG auditors, Christopher Stanley and Jennifer Stewart, will be able to apply for
reinstatement to practice before the SEC in three years and one year, respectively.
PHOTO: SAUL LOEB AGENCE FRANCE PRESSE GETTY IMAGES

By Kimberly Chin
Feb. 23, 2021 7 14 pm ET

Two former KPMG auditors were suspended from practicing before the Securities and
Exchange Commission over alleged improper professional conduct during a 2015 audit of
a now-defunct not-for-profit college that had overstated its assets, the agency said.

The SEC said that Christopher Stanley, a former KPMG partner, and Jennifer Stewart, a
former KPMG senior manager, had approved and issued an unchanged audit opinion on
the College of New Rochelle’s financial statements for the 2015 fiscal year despite
unresolved issues and unanswered questions, the agency said. Their suspension settled
the claims against them, the SEC said.

https://www.wsj.com/articles/sec-suspends-ex-kpmg-auditors-for-improper-professional-conduct-11614125649 1/3
2/25/2021 SEC Suspends Ex-KPMG Auditors for Improper Professional Conduct - WSJ

Mr. Stanley’s lawyer didn’t immediately respond to a request for comment. A lawyer for
Ms. Stewart declined to comment. The former auditors neither admitted or denied the
SEC’s findings.

NEWSLETTER SIGN-UP

Risk and Compliance Journal

Our Morning Risk Report features insights and news on governance,
risk and compliance.

PREVIEW SUBSCRIBE

“We are committed to executing quality audits, while continuing to foster a culture of
integrity. The actions as described in the SEC orders do not live up to KPMG standards,” a
KPMG spokesman said in an emailed statement.

The 2015 audited financial statements fraudulently overstated the college’s net assets by
$33.8 million, the regulator said. The college’s former controller, who had been charged
with defrauding municipal securities investors, had provided the audit team with
inaccurate, incomplete and contradictory information, the agency said.

The former controller, Keith Borge, declined to comment. He was sentenced in 2019 to
three years in prison after pleading guilty to charges of securities fraud and failure to pay
payroll taxes, according to the Justice Department.

MORE FROM RISK & COMPLIANCE JOURNAL

•SEC Opens Review of Corporate Climate Change Disclosures February 24, 2021

•U.K. Investment Managers Push for More Diversity on Boards February 24, 2021

•Executive Convicted in U.K. Bribery Case Against Unaoil Group After Retrial February 24, 2021

The college in 2016 owed millions in payroll taxes and additional debt, according to a
report released at the time by its board of trustees. The board launched an investigation
https://www.wsj.com/articles/sec-suspends-ex-kpmg-auditors-for-improper-professional-conduct-11614125649 2/3
2/25/2021 SEC Suspends Ex-KPMG Auditors for Improper Professional Conduct - WSJ

after learning of “significant unmet financial obligations.”

Mr. Stanley and Ms. Stewart failed to obtain sufficient appropriate audit evidence,
properly prepare audit documentation or examine entries, and adequately assess audit
risk during the auditing process, the agency said. They violated auditing standards and
failed to exercise professionalism, the agency added.

Mr. Stanley and Ms. Stewart agreed to remove themselves from appearing or practicing
as accountants before the agency, the SEC said. Mr. Stanley will have the right to apply for
reinstatement after three years and Ms. Stewart may apply after one year, the regulator
said.

“Auditors of municipal issuers are key gatekeepers in upholding the reliability and
integrity of financial information provided to investors in municipal bonds. It is critical
that they exercise professional care and skepticism,” Matthew Jacques, chief accountant
of the SEC’s enforcement division, said in a statement.

Write to Kimberly Chin at kimberly.chin@wsj.com

Would you like more stories like this?

YES NO

Copyright © 2021 Dow Jones & Company, Inc. All Rights Reserved

This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit
https://www.djreprints.com.

https://www.wsj.com/articles/sec-suspends-ex-kpmg-auditors-for-improper-professional-conduct-11614125649 3/3