After KPMG, Audit Firms Reconsider Procedures
KMPG, one of the Big Four accounting firms has suffered a blow to their reputation in a recent scandal involving insider trading. Insider trading usually occurs in investment banking so it is usual for it to be involved with an accounting firm especially when being ethical is such an important feature of being an accountant. Partner in KPMG, Scott I. London has admitted to leaking confidential data to a third party and said that he is embarrassed and regretted his actions. These types of scandals will push new rules for accounting firms to be more transparent. Firms will not have to restructure their internal training to make sure a situation like this does not arise again. The Public Company Accounting Oversight Board proposed that accounting firms have a partners name on the client’s paper and reports to put more pressure on preventing scandals like this. With the recent KPMG situation, the proposal will see a lot more supporters.
Everyone wants to make money by taking the shortest route possible but it does not always work out that way. Insider trading is illegal and can have a large impact on reputation especially when it comes to such a prestigious firm. As an accountant, being ethical is one of the most important aspect of being in the profession. Time after time scandals like this arise which give the public a sense of distrust which will ultimately lead to a decline in trust in accounting.
Written by: Wilson Tang