KPMG resigns from auditing Liberty Tax

KPMG has resigned as Liberty Tax’s independent accounting firm amid the continuing fallout over Liberty founder John Hewitt.

Hewitt, who had earlier founded Jackson Hewitt, was ousted as CEO in September by the Liberty Tax board.

An outside law firm found credible evidence that Hewitt was having romantic relationships with some of the Virginia Beach, Va.-based company’s employees and franchisees and giving them preferential treatment, according to the local newspaper, the Virginian-Pilot. However, Hewitt remained chairman of the board because he still had controlling shares of the company. He also managed to replace two of the directors of the board. Another board member resigned, as did the company’s CFO.

Liberty was scheduled to issue its quarterly earnings report on Dec. 8, but the filing was delayed after its auditor resigned. KPMG cited concerns around internal controls over financial reporting as it relates to the integrity and tone at the top set by Hewitt. The company said there were no disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. A spokesperson for KPMG declined to comment.

Scott Eells/Bloomberg

“We are disappointed that KPMG has resigned, however, we appreciate the long term relationship we have had with them,” said Ross Longfield, chairman of Liberty’s Audit Committee, in a statement. “The company will work as quickly as possible to engage a new accounting firm and to complete their review of our second quarter results.”