The U.S. Securities and Exchange Commission said on Friday it amended a pending civil fraud action against KPMG to charge a fifth partner of the Big 4 accounting firm in connection with its audits of Xerox Corp. from 1997 through 2000.
In a statement, the SEC said, it named Thomas Yoho in the amended complaint, which was originally filed in January, naming KPMG and four current and former partners.
“As in the original complaint, the amended complaint alleges that KPMG and its partners permitted Xerox to manipulate its accounting practices to close a $3 billion 'gap' between actual operating results and results reported to the investing public,” the SEC said.
KPMG spokesman Greg Dvorken said, “We will defend our firm and our partners against these unfounded charges and look forward to vindication.”
In 2002, Xerox agreed to pay a $10 million penalty to settle SEC charges that the office equipment maker had manipulated its financial results to inflate profits. Xerox, which neither admitted nor denied wrongdoing, restated financial results.
Yoho was concurring review partner for KPMG on the Xerox audit from 1994 until after the 2000 audit was completed and KPMG was replaced as Xerox's outside audit firm, the SEC said.
The SEC said its amended complaint “alleges that Yoho reviewed and evaluated the work of the KPMG audit team, and … signed off on the Xerox audit team's audit despite his knowledge of Xerox's fraudulent accounting practices.”
