Washington (Nov. 17, 2003) -- The Securities and Exchange Commission has begun a formal investigation into the relationship between financial services conglomerate Wachovia Corp. and its auditor, Big Four firm KPMG.
Specifically, the regulator has asked Charlotte, N.C.-based Wachovia for documents dating back six years regarding client referrals to the audit firm. The commission is probing whether those referrals constituted a breach of audit independence.
In a statement, KPMG said, “Our policy, in compliance with SEC and professional rules and regulations governing auditor independence, is that the firm does not pay referral fees to its audit clients, nor engage in joint marketing activities with its audit clients or have direct or material indirect relationships with them. KPMG believes its actions complied with independence rules and regulations. In fact, we have designed and implemented independence policies and procedures that meet or exceed the standards of the SEC and other regulatory bodies and believe that our independence procedures are among the best in the industry.”
Representatives from Wachovia were not available for comment at press time.
Wachovia also revealed that the SEC and the National Association of Securities Dealers may pursue enforcement against the company’s Wachovia Securities arm as part of a probe of whether the firm failed to provide breakpoint discounts -- discounts for customers who make large mutual-fund purchases.
-- WebCPA staff
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