giant KPMG probed for unlawful conduct.
prosecutors are investigating whether KPMG advised clients to participate in dubious
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.
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.
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.
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