KPMG agrees to pay SEC $22.5 million to settle

0 Comments | Deseret News (Salt Lake City), Apr 20, 2005

WASHINGTON (AP) -- KPMG LLP, the U.S. unit of Big Four accounting firm KPMG International, has agreed to pay $22.5 million to settle federal regulators' charges that it allowed Xerox Corp. to manipulate its accounting.

The Securities and Exchange Commission in January 2003 sued KPMG and certain of its partners, including the head of the firm's department of professional practice, in connection with the audits of Xerox from 1997 through 2000.

The SEC alleged that KPMG and its partners allowed Xerox to manipulate its accounting practices to close a $3 billion "gap" between actual operating results and results reported to the investing public.

The agreement announced Tuesday by the Securities and Exchange Commission resolves a civil lawsuit brought by the agency, which dropped its original fraud allegations against KPMG. The accounting firm is paying a $10 million civil fine and $9.8 million in restitution of its audit fees from Xerox in 1997-2000, plus $2.6 million in interest.

The money will go to compensate harmed Xerox investors, the SEC said.