Santa Ana, Calif. (July 30, 2002) -- Accounting firm KPMG was reportedly ordered to pay $1.8 million in fines and costs and put on probation for a year for alleged gross negligence and unprofessional conduct that contributed to Orange County's 1994 bankruptcy.
The California Board of Accountancy took action against the accounting firm late last week, according to a report by the Associated Press. According to the article, the ruling said KPMG's lead audit partner, Margaret Jean McBride, cut corners and ignored warning signs as county treasurer Robert L. Citron filed false accounts and faked interest earnings. McBride, who still heads KPMG's government audit section in Costa Mesa, reportedly received three years probation and 100 hours of community service. In addition, two auditors each got two years of probation, AP reported.
Orange County's investment pool collapsed in December 1994, resulting in a loss of $1.7 billion and the nation's largest municipal bankruptcy. Citron was forced to resign after revealing the losses.
KPMG reportedly plans to appeal the ruling. According to the report, the probation terms require KPMG's government auditing section to undergo investigation, and staffers must take 40 hours of coursework in the area.
-- Electronic Accountant Newswire staff
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