Ask any sports fan what the biggest news story and most will say it is the indictment of 14 men tied to FIFA. Short for the Federation Internationale de Football, FIFA is the world governing body for international soccer. It is also corrupt and rotten to the core, at least according to the United States Department of Justice.
Last month the Justice Department unsealed a 164-page indictment that essentially calls FIFA a criminal enterprise. Although it once had lofty goals of promoting soccer, prosecutors say the organization is today wrapped up in an international conspiracy involving racketeering, money laundering, wire fraud and massive kickbacks and bribes.
The Justice Department appears to have begun its investigation in 2012 but rumors of bribery and kickbacks were swirling for many years.
Obviously, the defendants are all presumed innocent until proven guilty and the organization itself has not been charged. Experience tells us, however, that where there is smoke there is fire. Assuming just a small percentage of the allegations is true, we want to know, Where were the accountants?
Is KPMG Guilty of Audit Malpractice?
For the past 16 years, FIFA has been audited by KPMG. Sure there was a correction here or there but in the end, FIFA received a spotless audit and clean bill of health for the last 16 years. How could no one from one of the largest accounting firms in the world spot fraud? KPMG has 160,000+ employees and claims to be one of the best auditing firms in the world. Yet no one caught what may be as large as $150 million in bribes and kickbacks.
The indictments detail one $10 million payment that went from a FIFA account to Jack Warner, a FIFA Vice President. The feds say that money was a bribe to help secure the World Cup in South Africa in 2010. No one from KPMG apparently questioned the transaction.
The problem with KPMG goes well beyond FIFA and it isn’t limited to just one accounting firm. The other three, “Big Four” firms of PricewaterhouseCoopers, Deloitte and Ernst & Young have had their fair share of audit malpractice scandals too.
Audit malpractice? In our opinion, yes.
Banks, individuals, other businesses and investors all rely on audited financials. Much of the revenue of the Big Four firms comes from audit work.
If a business or banks reasonably relies on a financial statement and suffers a loss, the auditor may be liable. Obviously, no accounting firm can uncover every petty theft. When the fraud becomes institutional and systemic, however, we believe that accountants have a duty to find and report the problems.
Audit malpractice cases aren’t easy but they can be won. There are special defenses unique to audit firms and in cases where the victim was a third party.
If you think you lost money or suffered a loss because of shoddy audit, give us a call. For more information, contact attorney Brian Mahany at or by telephone at (direct). Many cases can be handled on a contingent fee basis. Services available in many jurisdictions throughout the United States.
MahanyLaw – Legal Malpractice, Accounting Malpractice and Audit Malpractice Lawyers