Source: http://www.miamiherald.com/business/breaking-news/story/979193.html.
Date: 04/01/09
Summary:
New Century Financial Corp., an Irvine, Calif., mortgage lender has filed a lawsuit against KPMG for disclosing accounting errors on New Century Financial Corp.'s financial statements. The lawsuit charge that "Rather than exercise professional, independent and ethical judgment, as KPMG promised it would, KPMG LLP acted as a cheerleader for management to keep its client happy." In 2007 the stock plunged to 90%. Making it impossible for New Century to finance its lending business, and it went bankrupt.
Discussion Question: Is it ethically correct for KPMG keep its "clients happy" by giving them wrong information without any punishment by the law? If KPMG is saying the truth about New Century's bad financial judgement, how should the judicial system punish New Century for damaging KPMG's image?
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