Big Four firm KPMG could potentially face negligence litigation stemming from its audits of New Century Financial, the troubled mortgage company that collapsed last April, according to a report from an examiner for the bankruptcy court.The examiner, Michael Missal, a partner with Washington, D.C.-based law firm Kirkpatrick & Lockhart Preston Gates Ellis, said in a 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.”

KPMG however, disputed the claims in the report. “We strongly disagree with the report's allegations concerning KPMG,” said Dan Ginsburg, a firm spokesman. “We believe that an objective review of the facts and circumstances will affirm our position.” The examiner's report however also said that a negligence case would be difficult to win.

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