The Securities and Exchange Commission sanctioned KPMG LLP, two former partners and a current partner and senior manager for improper professional conduct in connection with audit failures involving licensing and advertising revenue in the past audits of Gemstar-TV Guide International Inc.
Without admitting or denying the SEC's findings, KPMG was censured and agreed to pay $10 million to Gemstar shareholders - the largest payment ever made by an accounting firm in an SEC action - to settle the charges. The firm also agreed to conduct training for its partners and managers on qualitative materiality, accounting for multi-element transactions, and consideration of appropriate disclosure related to complex accounting issues, and to adopt a policy requiring more effective consultation between audit engagement teams and the firm's national office in connection with possible restatements. KPMG served as Gemstar's auditor from 1993 until October of 2002.
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