Monday, December 20, 2004

PCAOB Said to Be Investigating KPMG Audit of Fannie Mae

The Public Company Accounting Oversight Board has reportedly opened an investigation into KPMG's audits of mortgage finance company Fannie Mae.

The board last week authorized its enforcement staff to scrutinize KPMG's work, according to a report by The Financial Times. The PCAOB investigation will reportedly look into whether the Big Four firm breached auditing rules in its work on Fannie Mae. KPMG became Fannie's auditor in 1969.

KPMG, through a spokesperson, declined to comment on the PCAOB investigation. A spokesman for the PCAOB said, "It would be inappropriate to comment on any action the PCAOB may or may not take regarding a specific company." Fannie Mae did not respond to a request for comment.

Fannie Mae, which is already under investigation by both the Justice Department and the Securities and Exchange Commission, also faces a possible $9 billion restatement following a review by the SEC that found that it violated accounting rules related to deferred purchase price adjustments and derivatives and hedging activities between 2001 and mid-2004.

PCAOB Said to Be Investigating KPMG Audit of Fannie Mae

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