KPMG’ explicit responsibilities for auditing MS&Co included:
• KPMG’S audit Procedures relative to MS&Co’s assets at BAC were to obtain a confirmation from BAC of assets on held on MS&Co’s behalf
• To search public records to ensure no adverse issues were noted for BAC relating to any regulatory actions.
In September, 2014 MS&CO’s investors and creditors initiated a lawsuit against their auditors, KPMG, on the charge that they conducted a substandard audit, while also failing to follow GAAS. These allegations included negligence for failure to investigate DCH, failure to uncover the fraud of BAC, and failing to uncover the lack of controls at BAC. The question that needs to be answered is whether or not, KPMG, had any exposure in the matter.
In accordance with GAAS, AU Standard 3.16.04 states that “management is responsible for designing and implementing internal controls to prevent, deter, and detect fraud”. As MS&Co’s auditors, KPMG did not have the responsibility to investigate what the auditors for BAC were doing. BAC’s auditors, DCH, were responsible for their entity but because they …show more content…
MS&Co’s allegations against KPMG aren’t enforceable as KPMG did what they were responsible to do for MS&Co, not BAC. Their working papers show how the fraud could have been perpetrated through the arrangement, and lack of scrutiny against BAC on MS’ part. KPMG did not have any exposure in the matter, and they did adequately express their responsibilities with accordance with
• KPMG’S audit Procedures relative to MS&Co’s assets at BAC were to obtain a confirmation from BAC of assets on held on MS&Co’s behalf
• To search public records to ensure no adverse issues were noted for BAC relating to any regulatory actions.
In September, 2014 MS&CO’s investors and creditors initiated a lawsuit against their auditors, KPMG, on the charge that they conducted a substandard audit, while also failing to follow GAAS. These allegations included negligence for failure to investigate DCH, failure to uncover the fraud of BAC, and failing to uncover the lack of controls at BAC. The question that needs to be answered is whether or not, KPMG, had any exposure in the matter.
In accordance with GAAS, AU Standard 3.16.04 states that “management is responsible for designing and implementing internal controls to prevent, deter, and detect fraud”. As MS&Co’s auditors, KPMG did not have the responsibility to investigate what the auditors for BAC were doing. BAC’s auditors, DCH, were responsible for their entity but because they …show more content…
MS&Co’s allegations against KPMG aren’t enforceable as KPMG did what they were responsible to do for MS&Co, not BAC. Their working papers show how the fraud could have been perpetrated through the arrangement, and lack of scrutiny against BAC on MS’ part. KPMG did not have any exposure in the matter, and they did adequately express their responsibilities with accordance with