Blame game: KPMG accused of lax auditing of New Century

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From The LATimes: ‘Driven by a ‘brazen obsession’ with generating sub-prime mortgages, Irvine’s New Century Financial Corp. engaged in improper accounting that overstated its profit and allowed top executives to reap millions of dollars in inflated or undeserved bonuses, a U.S. Bankruptcy Court examiner said in a report released Wednesday.

More: ‘Michael J. Missal’s report said senior managers ‘turned a blind eye’ to the ‘ticking time bomb’ created by the high-risk lending in 2005 and 2006. At the same time, Missal said, New Century’s auditor, KPMG, contributed to the problems by failing to exercise due care in reviewing its books, leading to material misstatements in New Century’s financial reports.’

From The New York Times: ‘In a sweeping accusation against one of the country’s largest accounting firms, an investigator released a report on Wednesday that said ‘improper and imprudent practices’ by a once high-flying mortgage company were condoned and enabled by its auditors.’

KPMG denies the accusations in the report, which was commissioned by the United States Trustee overseeing the New Century bankruptcy.

Your thoughts? Comments? Email story tips to peter.viles@latimes.com
Photo Credit: New Century Financial’s Irvine headquarters, in a file photo from May 2007, via L.A. Times