Big Four firm KPMG could be sued for professional negligence for its audits of New Century Financial and for helping the troubled mortgage company devise accounting strategies to hide the problems that led to its collapse last April, according to a report from an examiner for the bankruptcy court.
The examiner, Michael Missal, said in his 580-page report that KPMG "failed to exercise due care in planning and carrying out its audits and reviews, failed to demonstrate appropriate professional skepticism with respect to management's judgments, and failed to obtain sufficient competent evidence to support its opinions and representations to the company's officers, directors and shareholders."
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