"Earlier today the U. S. Department of Justice announced that they have entered into a deferred prosecution agreement with KPMG LLP that addresses issues stemming from past services provided by KPMG's tax practice. KPMG has represented that it has stopped providing the types of tax services addressed in this case and that it has made significant changes in the structure and operation of the tax practice of the firm, and the supervision of that practice, in order to avoid similar issues in the future. The agreement by KPMG provides a comprehensive and forward-looking framework for addressing the violations identified by DOJ, which do not arise under the federal securities laws. In addition, pursuant to the agreement, the United States Attorney for the Southern District of New York, David Kelley, appointed former SEC Chairman Richard Breeden to monitor the firm's compliance with the terms of the agreement. The PCAOB has advised me that it is issuing a statement on KPMG's ongoing ability to perform audits of public companies based on its annual inspections of KPMG's auditing work.
"I am pleased that DOJ and KPMG have reached an agreement to resolve the issues under investigation by DOJ. I believe that the past conduct described in the agreement was unacceptable and the resulting penalties are appropriately significant. The agreement addresses tax shelter activities outside KPMG's audit practice and does not require or call for Commission action. Commission staff will of course monitor the situation in view of the Commission's responsibilities to investors and markets."
