KPMG To Be Investigated

SYDNEY, Australia (June 6, 2001) -- An accounting firm serving as liquidator for a major PC manufacturer has accused Big Five firm KPMG of awarding the company a gold star despite its insolvency, according to a story in the Sydney Morning Herald.

Alan Topp, a chartered accountant with Sydney-based Armstrong Wily & Co., said that Edge Technology, which collapsed last year after owing over $36 million, continued to trade for nearly a year after it had gone bankrupt-until early summer-yet KPMG had certified Edge's "unqualified reports" for the 1998-1999 fiscal year over 3 months earlier in February of 2000, the Herald reported.

The whereabouts of Edge's founder, Jen-Tse (Johnson) Wang, and his wife are presently unknown, but Armstrong Wily has acquired a court order requiring KPMG to provide the former with records pertaining to the Big Five firm's involvement with Edge.

"They have to give us all the audit files, internal memos, correspondence-everything," Topp said. Such documents will aid Armstrong Wily in concluding whether or not KPMG "should have determined that [Edge] was insolvent" and if "proceedings ought to be commenced against the auditor."

Armstrong Wily's allegations are particularly disconcerting for KPMG at this time given its current investigations of rivals PricewaterhouseCoopers and Andersen in connection with the downfalls of two of Australia's largest corporate entities (Harris Scarfe and HIH, respectively), the Herald said.

--Cori L. Gabbard

Click here for a printer-friendly version of this article