KPMG expects Xerox audit charge

2003-01-23 16:26

New York - Accountancy giant KPMG LLP said Wednesday it expects to be charged by Securities and Exchange Commission over disputed audits of Xerox Corp. accounts.

KPMG had learned the commission would file a complaint in federal district court against the firm, three current partners, and one former partner in connection with its audits of the 1997-2000 Xerox statements

"It is astonishing to us that the SEC would choose to bring this action where KPMG so clearly did the right thing," KMPG said in a statement, vowing to defend itself.

In April, US regulators accused Xerox of betraying investors in a four-year scheme to inflate earnings, hailing a record $10m fine against the copier giant.

Two months later, Xerox revised downward its pretax profit by $1.4bn over a five-year period and wrote down its equity by $1.3bn.

KPMG, which was replaced by PricewaterhouseCoopers as the auditor of Xerox in 2001, said at the time it stood by its audits of the firm. It said the restated finances by Xerox "defy economic reality".