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Big Four audit partner censured for ethics breaches

KPMG partner Bill Wilkinson is the latest accountant to fall foul of the industry’s self-disciplinary process following the wave of finance company failures.

Mr Wilkinson, who has been an audit and advisory partner for over 20 years, was censured and ordered to pay costs of $9,577 (plus GST) after pleading guilty to two charges brought by the Disciplinary Tribunal of the Institute of Chartered Accountants.

The charges related to breaches of the industry codes of ethics when Mr Wilkinson performed an audit of a company’s financial statements for the six months ended December 31, 2007.

All details relating to the identity of the client were suppressed from publication following a public hearing in Wellington on November 26.

The guilty charges related to poor documentation on the audit file to support conclusions that:

- Company X did not have to disclose analysis of expected maturity dates of both financial liabilities and assets; and

- Provision for credit impairment was adequate, when the audit work papers indicated that a substantially higher provision “was, or might have been, warranted.”

In his decision, tribunal chairman Jim Hoare said Mr Wilkinson agreed to a proposal as to the penalty, costs and publication.

“It was not alleged that there was any substantive error in the audit or failing in the audit procedures or that the audit opinion was inappropriate. The charges solely relate to the lack of sufficient documentation.

“In the absence of any evidence other than the abbreviated facts presented to the tribunal we have no reason to vary the parties’ joint recommendation of censure, full costs and publication with suppression of the identity of the audit client.”

Mr Wilkinson told NBR he couldn’t comment on the case.

His public censure is one of several recent disciplinary rulings against high profile auditors as the industry deals with the fallout from finance company collapses.

Recent cases include Woodnorth Myers partner Byron Pearson for his audit of South Canterbury Finance, Ernst & Young former partner Gordon Fulton for a half-year review of Feltex Carpets’s financial statements and Staples Rodway Hamilton partner Christopher Hughes for his audit opinion on the financial statements of Nathans Finance for the year ended 30 June 2006.

A bill was recently introduced to Parliament that will require the Institute of Chartered Accountants (NZICA) to regulate auditors as a specialist profession, rather than as chartered accountants.

The bill also provides for the proposed Financial Markets Authority to be responsible for auditor oversight in monitoring and reporting on the adequacy and effectiveness of the institute's regulatory systems. 

More by Duncan Bridgeman

Comments and questions
10

“It was not alleged that there was any substantive error in the audit or failing in the audit procedures or that the audit opinion was inappropriate. The charges solely relate to the lack of sufficient documentation."

So was the whole exercise a waste of time - scarce resources applied to a trivial matter when a warning letter would have been more appropriate? Just asking.

About time, CA firms charge top rates so you should expect top service. I'm surprised more partners are charged!
How could PwC miss a $20m hole in NZ Post accounts and get away with it.

Which failed finance company that KPMG audited could this relate to? There are so many to chose from - Lombard, St Lawrence, etc, etc. The smart money says HANOVER given the name of the company has been withheld. I wonder if these breaches took place on the audit Rob Alloway has called into question? Watch this space...

The paragraph reads:- It was not "alleged" that there was any substantive error.

It's what the The Disciplinary Tribunal very carefully DID NOT say, and it did not say there weren't any errors, substantive or otherwise.

Synchronicity and a bad hair day for KPMG
Same thing, same day, happening accross the ditch
http://www.theaustralian.com.au/business/kpmg-auditor-suspended-over-allco-bungle/story-e6frg8zx-1225966655358

Typical rubbish from an industry body ruling on an industry member - no substance to the ruling, no accountability, no mention of the nam eof the financial institution as the Chartered Accountnats would not want to admit that their audirt blurred the financial material that investors made their investment decisions on or they could face legal suits.

Another wet bus ticket for one of their own - similar to the old Police Complaints Authority scenario
Not a very honest approach

KPMG did the Hanover Prospectuses until moratorium
More to hear

Secretary and director takes $10s of thousands of dollars. Chartered Accountant hides the money by splitting money across other directors current accounts then equalizing directors current accounts end of year. I wonder what the Institute of Accountants would do with that accountant.

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