KPMG Reputation Crisis

The KPMG insider trading scandal is a big deal that has huge implications.

The accountancy profession has been under scrutiny over its performance during the financial crisis, and since the failure of Arthur Andersen in the wake of Enron.

KPMG has issued a statement condemning the partner’s ‘rogue actions’.

Honest Accountants

Honest Accountants

Journalists will look for the newsworthy angles – to whom was the information passed, what was the information, did it lead to buying or shorting stock, and who else was involved?

But the big issue here is actually the reputation of KPMG, the broader accountancy profession, and the ability to deliver accurate, impartial and confidential assessments of companies’ financial positions.

The most damaging sort of reputational crisis is that where the core business of an organisation is called into question.

The business model of the accountancy profession is built upon partners acting with discretion and impartiality, in a position of trust.

The violation of those principles by a partner, however ‘rogue’, is something KPMG and the profession will now have to grapple with.

The accountancy firm’s culture, practices, oversight, and controls will be subject to a great deal of scrutiny in the coming days.

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