KPMG Refused To See Red Flags: SEC

Law360, New York (February 17, 2006, 12:00 AM EST) -- The Securities and Exchange Commission has accused auditors at KPMG of "refusing" to recognize red flags while appraising the financial health of a unit of Dutch grocery giant Royal Ahold NV, which recently paid $1.1 billion to settle an accounting fraud class action lawsuit.

The widespread improper professional conduct took place when KPMG audited US Foodservice Inc. (USF) in 1999, as well as during an interim review for the company in the second quarter of 2000, according to the SEC.

The SEC claims the alleged failures...
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