Senators Open Probe Into KPMG’s Relationships With Failed Banks

Two senators are looking into KPMG’s relationship with three recently failed banks, asking the firm for a wide range of documents for their initial inquiry.

Sens. Richard Blumenthal (D-Conn.) and Ron Johnson (R-Wis.) sent a letter to KPMG CEO Paul Knopp Wednesday asking for “all communications,” records “referring or relating to” the firm’s audits and advisory work, and a “complete list of all advisory work” between KPMG and Silicon Valley Bank, Signature Bank, and First Republic Bank.

The senators said in the letter they’re asking for the trove of documents under their authority to review “matters relating to auditing and risk management standards for financial institutions” as the top leaders of the Homeland Security and Governmental Affairs Committee’s Permanent Subcommittee on Investigations.

The inquiry is the latest obstacle facing KPMG, as crisis after crisis hit the firmand other Big Four accounting firms EY, PwC, and Deloitte over audit quality, the role of consulting and auditors’ integrity.

KPMG drew an added layer of scrutiny for issuing clean audits of all three banks shortly before they collapsed.

“KPMG also appears to have had longstanding relationships with all three banks, having served as SVB’s auditor for nearly 30 years and Signature’s auditor for over 20 years prior to their failures,” the senators wrote.

As a result, the pair also asked KPMG for “all documentation” detailing the firm’s policies and practices for any non-audit services, as well as “a complete list” of the firm’s employees, contractors, and subcontractors that were employed by any of the banks after their affiliation with KPMG.

They requested that the firm send the documents as they become available instead of one big batch to “expedite the subcommittee’s review.”

A KPMG representative did not immediately provide a comment.