SHANGHAI (Reuters) - Renewed calls by U.S. regulators for those who sign off on audit reports to be publicly named, sparked by an insider trading scandal at KPMG KPMG.UL, will do little to restore investor confidence, the audit firm’s chairman said on Tuesday.
Michael Andrew said the proposal would do little to fix real problems such as determining what types of financial data need to be audited as well as boosting the flow of information between regulators and government agencies.
“I don’t think it’s important. I think it’s quite misleading. There are much more fundamental things that need to be done to restore confidence in investors than just having the individual partner designated on the account sign his name,” KPMG’s global chairman told Reuters.
Earlier this month, U.S. authorities filed criminal and civil charges against 29-year KPMG veteran Scott London for allegedly passing non-public information about five of the firm’s clients to a golf partner.
The Securities and Exchange Commission (SEC) alleged the scheme brought London’s friend, Bryan Shaw, $1.3 million in illicit trading profits. In exchange for the information, Shaw paid London $50,000 in bags of cash, plus gifts including a $12,000 Rolex watch, according to the SEC.
The U.S. Public Company Accounting Oversight Board has been exploring the idea of requiring the identity of so-called engagement partners, those who oversee audits, since 2009. Following the KPMG scandal, it has said it is likely to re-propose the rule in the coming months.
Andrew said there were various policies in place at the accounting firm to ensure business practices were sound, but it was not completely waterproof.
“This was something where the individual was personally benefiting himself. I don’t know what controls you can put in place around that,” he said.
Reporting by Kazunori Takada; Editing by Stephen Coates