SEC to charge auditors in Ahold scandal
Feb 21, 2006 9:22 AM, from staff and wire reports
Two KPMG auditors will face charges filed by the Securities and Exchange Commission for allegedly failing to act on warning signs that would have caught the $30 billion Royal Ahold accounting scandal sooner.
These auditors, KPMG partner Kevin Hall and senior manager Rosemary Meyer, worked for Ahold, the Dutch-based international food retailer. Its US Foodservice unit distributes food to restaurants, military bases, civil governments, and caterers. The firm allegedly exaggerated earnings by improperly logging revenue from joint ventures. Ahold and the SEC reached an agreement in October 2004 that kept the retailer from paying any fines, though it paid $1.1 billion in a 2005 shareholder lawsuit settlement.
According to the SEC, Hall and Meyer knew of accounting irregularities in US Foodservice’s 1999 financial statements, but they ignored the problems and did not clarify them or report them to the firm's audit committee. Both auditors allegedly believed US Foodservice management's assurances that promotional rebates had been accounted for.
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