David Mittendorf, the second-in-command for KPMG’s audit practice, said at the sentencing hearing that “never in my wildest imagination” did he think that obtaining the names of those KPMG clients that the Public Company Accounting Oversight Board (PCAOB) was targeting for audit-quality review was criminal. Let’s see — obtaining information from a quasi-government enforcement agency that is not public is not somehow on your list of no-nos? Mr. Mittendorf added that what had already happened to him (being taken away in shackles at 5:45 AM, etc) was sufficient deterrent for any auditors out there thinking up such scams. The judge did not buy, and off to prison he goes. Safety tip for sentencing hearings? Pull a Felicity Huffman — contrition, tears, and apologies to those who got cheated. 14 days for fraud on that one. Saying, “I had no idea!” is not a sentence-reducer.
Notice, Mr. Mittendorf did not say he did not think it was cheating. The goal here was to do a better job on those company audits than the ones that PCAOB was not going to review. Sort of defeats the whole goal of quality audits, does it not? KPMG assures that it has learned: it has now invested in new software to improve audit quality. Ironic, is it not? If only they had spent the money first instead of attempts at gaming the system.