Big 4

Status of players in KPMG fiasco from leaked PCAOB inspection lists.

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As refresher, some time back senior level staff from KPMG worked to illegitimately gain access to the list of engagements which were going to be subject to inspection by PCAOB. You can catch up on the news by reading my posts with tag of Big 4.

This is old news at this point. Those of us interested in the ethical failure still want to monitor the status of the players. Previous list, found here, has been reworked since it was getting a bit cumbersome to update and confusing to read.

The five KPMG staff and one PCAOB staff who were charged are listed below with their status at various times. Updates will be mentioned as time passes and this page updated with new status.

Overall status:

  • 10/19/20 – 1 released from prison, 1 sentenced & awaiting deportation, 2 awaiting sentencing, 2 convictions on appeal.
  • 12/13/20 – 4 sentenced (of whom 1 released from prison, 1 to serve house arrest after deportation, 2 on probation/supervised release) and 2 convictions on appeal.


  • 10/18/20 update – David Britt was sentenced to six months home confinement to be served from his new home in Australia after he is deported from the United States.
  • 12/13/20 update – Thomas Whittle sentenced to two years supervised release and Brian Sweet sentenced to time serviced, three years probation, and to-be-determined restitution.
  • 1/4/22 – Brian Sweet and David Britt surrendered their CPA license to the California Board of Accountancy in 11/21 and 8/21, respectively.

Participants and their status:

=============== …

SEC practice ban for three accountants tangled up in KPMG/PCAOB fiasco.

Securities and Exchange Commission Building, Washington, DC.

Going Concern is doing a great job keeping us all updated on the status of the current felons / former KPMG and PCAOB staff tangled up in the inspection list theft fiasco.

Several tidbits from Jason Bramwell on 1/16/20 I just noticed:  SEC Takes Away Privileges From Another Felon In KPMG/PCAOB Scandal.

Staff who have been banned by the SEC from practicing before the Commission:

Last person in KPMG inspection leak fiasco enters guilty plea

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The last person to face justice in KPMG’s fiasco of gaining illegal access to PCAOB inspection lists entered a guilty plea a few weeks before his scheduled trial.

David Britt entered a guilty plea on 10/3/19 to one count conspiracy to commit wire fraud. His trial would have otherwise started on 10/21/19.

Sentencing is scheduled for 5/8/20.

Second sentencing in KPMG fiasco of getting list of PCAOB inspection list.

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The most senior level former partner charged in the KPMG “steal the exam” fiasco was sentenced to one year and one day in prison for his role in the leak of PCAOB inspection targets. David Middendorf received a fraction of the 37-46 months requested by US Attorney office and 46-57 months recommended by the United States Probation Office.

Some articles to provide lots more info:

Wall Street Journal – Jean Eaglesham – 9-11-19 – Ex-KPMG Partner Sentenced to a Year and a Day in ‘Steal the Exam’ Scandal

Crain’s New York Business – Aaron Elstein – 9/11/19 – Former top KPMG partner gets a year and a day in prison – Article points out the sentence of a year plus one day means Mr. Middendorf is eligible for good behavior credit.

More details on first sentencing in KPMG/PCAOB fiasco as second sentencing is expected today.

Image courtesy of Adobe Stock.

The second sentencing in the fiasco of leaking PCAOB’s inspection list to KPMG is set for 10:30 today, 9/11/19.

Background on Mr. Middendorf sentencing

David Middendorf will face federal judge J. Paul Oetken to learn how long he will be in federal housing. Judge Oetken is handling all of the trials in this case.

On 7/26/19 Mr. Middendorf submitted his arguments on sentencing (docket #379). If you have lots of time on your hand, you can also read the 25 attachments.

The US Attorney filing had this comment (#394), which I’ll quote:

Two articles provide more info on SEC sanctions against KPMG for ‘stealing the exam’ and CPE course cheating fiascos.

Image courtesy of Adobe Stock.

For more discussion on the dual fiascos of the now-former-senior KPMG partners getting the PCAOB inspection list and altering workpapers along with cheating on continuing education classes, check out these two articles:


Francine McKenna at MarketWatch on 6/18/19 The KPMG cheating scanal was much more widespread that originally thought.

Article provides a good summary of the settlement.

Try this on for a word picture, which I’m expanding from Francine’s description in the article:

Getting a $50M fine from stealing the inspection list (and then altering workpapers) is the powerful right punch that everyone was expecting. The test cheating part is a staggering left hook that nobody saw coming.

KPMG agrees to $50 million fine from SEC. The details are really bad.

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Oh, remember that post about the SEC considering a $50M fine against KPMG?  Initial report suggested it was for gaining access to the list of engagements which were going to be inspected by PCAOB.

It is much worse.

The firm is fined for altering workpapers based on the inspection list. In addition, there was a lot of cheating on the tests for CPE courses, including a class required by the SEC.

The SEC says KPMG has agreed to settle and pay $50M.

If you want to read the gory details for yourself, you can do so:

This is for real. Seriously.

By the time you finish reading this post or other reports on the SEC’s action, you may be wondering whether there needs to be an assertion the source of information for this post was neither The Onion nor Babylon Bee.

Reports of setting your own passing score for an ethics test could make you wonder if it is very early April. “Cooperate and graduate” exchanges of test answers with the engagement partner and your audit team makes one wonder whether we have entered some sort of alternate reality.

You may want to glance at the linked documents and verify for yourself they are for real.

I assure you the above documents are from the website.

SEC action

In part II of the administrative action/cease & desist order, KPMG admits the facts described in part III.

Here are some highlights of part III.

First cause of action

The first cause of action by the SEC is the firm obtained the list of engagements which were going to be inspected by PCAOB and then altered workpapers which had not yet hit the lock-down date.

SEC considering a $50M fine against KPMG

It will take a bigger stack of currency than shown above if the SEC follows through with what they are considering. Image courtesy of Adobe Stock.

The Wall Street Journal reported on June 13, 2019 that the SEC is considering a fine of $50,000,000 against the Big 4 firm KPMG for it gaining access to the highly confidential list of audits scheduled for inspection by PCAOB.

Two convictions for former-KPMG staff gaining access to PCOAB inspection list

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Back in March a jury returned convictions for two of the players in the effort to get a list of the audits which were scheduled to be inspected by PCAOB.

(Yeah, yeah, conviction was in March and I’m mentioning it now in June. I’m just a tad bit late to the story but still want to discuss it.)

A senior level former-partner, David Middendorf, was found guilty on 4 of 5 counts. He was the National Managing Partner for Audit Quality and Professional Practice Group, in the firm’s Department of Professional Practice. That means he was the top technician in the national office of top technicians.

Trial of former partner at KPMG starts today

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One former partner at KPMG and a former PCAOB staffer get their day in court today, February 11, 2019. Actually, it will be about four weeks in court, according to Michael Rapoport of the Wall Street Journal: KPMG Ex-Partner Goes on Trial in ‘Steal the Exam’ Scandal.

David Middendorf was a KPMG partner until April 2017. He was National Managing Partner for Audit Quality and Professional Practice Group, in the Department of Professional Practice (DPP). He reported to the Vice Chair of Audit.

Jeffrey Wada was a PCAOB Inspections Leader from February 2012 through February 2017.

Both are in court today defending themselves against charges they received and leaked, respectively, the list of KPMG audits which were scheduled for inspection by PCAOB.

Update on KPMG gaining access to PCAOB inspection schedule. Possible impact on inspection results.

….what might need improving at KPMG based on PCAOB reports. Image courtesy of Adobe Stock

The PCAOB released results of the inspections during the 2017 cycle. The results are not pretty.  In addition, PCAOB released previously confidential comments from the 2015 report.

Michael Rapoport has the details in the Wall Street Journal on January 25, 2019:  KPMG Gets Poor Marks From Audit  Regulator / Regulator unseals sharp criticism of Big Four accounting firm’s quality during period spanning leak scandal.

In a painful phrase, the article quotes prosecutors as labeling this as a

“steal the exam” scheme.

In the 2016 audit cycle, PCAOB replaced 11 engagements that had already been reviewed with 10 others. Of the 11 replaced, 3 had significant deficiencies. Of the 10 replacements, 9 had deficiencies.

List of key players in KPMG fiasco over leaked PCAOB inspection lists

Three accountants in this story entered the above building innocent and left as a felon. Image courtesy of Adobe Stock.

10/19/20 update:  This list is getting cumbersome to update and read. It has been reformatted and posted here.  This post will not be updated after today. Check the newer post for all future updates.


Sometimes you gotta’ have a scorecard to keep track of the players and the story. After a former partner pled guilty this week in the fiasco at KPMG over leaking of PCAOB inspection targets, I had to sort out again who was who.

So, I sketched out a list of the players and a bit of info about each.

Will update this list as the criminal cases move forward.

The roster of players and their status: …