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Corporate Conflicts
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Accounting giant KPMG probed for unlawful conduct.

Federal prosecutors are investigating whether KPMG advised clients to participate in dubious tax shelters.

The Justice Department has been investigating KPMG and some former partners for promoting the sales of tax shelters from 1996 through 2002 for wealthy individuals. The shelters allegedly violated the tax laws and yielded large advisory fees for KPMG while costing the government as much as $1.4 billion in lost revenue.

After seeing what happened to Arthur Andersen, the accounting profession and government are more than likely to seek resolution with KPMG through a negotiated cash settlement. With the "Big Eight" now consolidated to the "Big Four", there won't be any "independent" public accounting firms left to audit the Fortune 1000 companies.

Just how effective is the Sarbanes-Oxley Act if firms such as KPMG know that their license to practice won't be revoked such as the case with Arthur Andersen? It seems like regulators have virtually no leverage on KPMG as a prolonged court case would prove to be more costly than any negotiated cash settlement. At this point, prosecutors can only go after the specific partners involved in the tax shelter advisory scandal and possibly bar them from private practice including tax consulting. This would serve as a deterrent for any accounting professional from participating in any future schemes.

2005 Nelson Chin.
To inquire about consulting or speaking engagements, e-mail: Nelson Chin

Other Commentaries:

Former Computer Associates CEO faces new indictment. Could auditors have detected the fraud ?

Adelphia and ex-CEO Rigas to settle fraud case.

Arthur Andersen Conviction Overturned: Too Little Too Late.

Worldcom's Ebbers faces $30 Million Fine and life in prison.

Russian Oil Tycoon Mikhail Khodorovsky: Guilty of Fraud and Victim of Politics?

Accounting Giant KPMG Probed for Unlawful Conduct.

Former CEO of HealthSouth Scrushy acquitted.

Former Tyco CEO Kozlowski convicted, faces 30 years.

Outgoing TOYS R US CEO's Favorite Toy? The Golden Parachute.

Sayanora Citigroup. Japan shuts down Private Banking Unit.

Heist at the Bellagio or plot twist for the New Ocean's Eleven sequel?

Eisner versus Ovitz. The Showdown in Tinseltown.

Marsh sinks deeper in insurance scandal.

Managers disconnected at Verizon.

What is Martha stuffing in her stocking this holiday season?

Is Apprentice Street Smart Candidate a College Graduate?

Outsourcing Employees - coming soon.

Samples of Written Policies:

Conflicts of Interest v1
Conflicts of Interest v2
Conflicts of Interest v3

Audit Committee v1


Sarbanes-Oxley Act of 2002

Final Arthur Andersen Alumni Letter

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