$1-million penalty: KPMG India settles with US audit regulator PCAOB

KPMG India on Friday said it had reached a settlement with the US audit regulator, public company accounting oversight board (PCAOB), after the latter slapped a penalty of $1 million on the firm and another $75,000 on the auditing firm’s partner Sagar Lakhani for violating its rules and quality control standards concerning audit documentation.

“As a firm we are focused on delivering high quality audits and the conclusion of this matter, along with the enhancements we have made to our quality control systems, enables us to move forward,” the statement said.

It further added, “We remain committed to a culture built on quality and integrity in line with KPMG’s values, building public trust and delivering high quality professional services to fulfil our important role in the capital markets.”

In the order issued on Dec­ember 6, the Washington-based regulator had censured both pa­rties and asked KPMG India to undertake and certify the co­m­­­pletion of certain imp­rov­e­m­e­n­­ts to its system of quality control.

The PCAOB found that Lakhani and certain other engagement team members signed off on blank placeholder work papers in KPMG India’s electronic audit software. Its order said Lakhani failed to adequately supervise the engagement team and exercise due professional care. The said lapses relate to the audit of a Mumbai-based banking company for the 2017 fiscal year.

KPMG India informed the board that since the events took place, it had disciplined certain personnel and established and implemented changes to its quality control policies and procedures.