KPMG chair calls for global standards, cites Olympus fraud

HONG KONG Fri Nov 25, 2011 2:01am EST

HONG KONG Nov 25 (Reuters) - KPMG'S chairman on Friday outlined ten steps needed to improve the auditing industry, calling for a global set of standards and saying the Olympus Corp scandal reveals evidence of "significant fraud" although it is too soon to cite governance failure.

"We need a global set of accounting standards," said Michael Andrew at the Foreign Correspondents Club here, in a speech entitled "Fraud, Financial Crises and the Future of the Big Four".

He also called for more regulatory oversight as auditing firms have found themselves caught between regulators wanting different rules and standards. Andrew cited this year's accounting scandals involving Chinese companies listed in the United States as an example.

He also spoke of the difficulties in Europe, where accounting for Greek debt was not being factored under one standard by the parties impacted.

Andrew said he was constrained in what he could say about the Olympus scandal, although he did address the issue, saying that KPMG had done the right thing in the actions it took pertaining to the Japanese company.

"What is pretty evident to me is that it is a very, very significant fraud," he said, adding: "We should wait for the Japanese authorities to disclose that."

"I think it is very hard to jump to the conclusion that it's a corporate governance failure," he said.

KPMG AZSA LLC audited Olympus for several years until 2009, when it was replaced by Ernst & Young ShinNihon LLC. An internal document obtained by Reuters showed that the maker of cameras and medical equipment replaced KPMG after a dispute over how to account for some acquisitions.

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