[Plura-list] KPMG audits the nursing homes it advises on how to beat audits

Tue May 9 11:39:54 EDT 2023

Read today's issue online at: https://pluralistic.net/2023/05/09/dingo-babysitter/

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Tomorrow (May 10), I'm in VANCOUVER for a keynote at the Open Source Summit:

https://events.linuxfoundation.org/open-source-summit-north-america/

And a book event at Heritage Hall:

https://www.eventbrite.ca/e/red-team-blues-cory-doctorow-in-conversation-with-sean-cranbury-tickets-608877016547

On Thu (May 11), I'm in CALGARY for Wordfest:

https://wordfest.com/2023/event/wordfest-presents-cory-doctorow/

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Today's links

* KPMG audits the nursing homes it advises on how to beat audits: Too big to fail, too big to jail, and an existential risk to civilization.

* Hey look at this: Delights to delectate.

* This day in history: 2008, 2013, 2018, 2022

* Colophon: Recent publications, upcoming/recent appearances, current writing projects, current reading

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👩🏻‍🚒 KPMG audits the nursing homes it advises on how to beat audits

Auditors are capitalism's lubricants, who keep the gears of finance capital smoothly a-whirl, allowing investors to move their money in and out of companies without having to go pore over their books and walk through their facilities. Without auditors, the gears of capitalism would grind themselves to dust:

https://pluralistic.net/2021/02/18/ink-stained-wretches/#countless

Unfortunately for capitalism, auditing is irredeemably broken. The Big Four auditors (PWC, EY, Deloitte and KPMG) have merged to monopoly, becoming "too big to fail" and "too big to jail." These four gigantic firms have spun up fantastically lucrative "consulting" divisions that advise companies on how to cheat on their audits and attain incredible (paper) gains. The work of these "consultants" is worth far more than the accounting and auditing jobs the companies do, and the weaker the audits are, the more profitable the consulting is:

https://pluralistic.net/2021/06/04/aaronsw/#crooked-ref

This crisis has been a long time brewing. Back in 2001, the accounting/consulting giant Arthur Andersen was at the center of Enron's fraud, which lit $11B in shareholder capital on fire. Enron had been making everyday people angry for years, engineering rolling blackouts and incredible energy-price gouging, but no one cares about working peoples' complaints. By contrast, stealing $11B from rich people was something the authorities couldn't ignore. They gave Andersen the death penalty, trying to teach the surviving accounting firms a lesson about what happens when you fuck with plutes.

But those other firms learned the wrong lesson: the collapse of Andersen was so disruptive that it soon became clear that the authorities would never take another giant consulting firm down, no matter how egregious its conduct was. They doubled down on crime, and then doubled down again.

It's hard to pick a winner in the Big Four Accounting Firm Corruption Olympics, but KPMG is a strong contender, with a long history of just being monumentally inept and wrong. Back when Enron was unspooling, KPMG devoted itself to threatening people who linked to its website "without a license to do so":

https://web.archive.org/web/20020207141547/http://chris.raettig.org/email/jnl00040.html

A couple years later, they declared war on wifi, trying to convince normies that wireless networks were an existential risk to human civilization:

http://news.bbc.co.uk/2/hi/technology/2885339.stm

But there's not much money in wifi scare stories or licenses to link. KPMG are good dialectical materialists, devoted to money over ideology, and boy did they figure out some wild ways to make money. For one thing, they figured out that they could get more accountants certified by *cheating*...on *ethics exams*:

https://www.marketwatch.com/story/the-kpmg-cheating-scandal-was-much-more-widespread-than-originally-thought-2019-06-18

KPMG's top managers bribed regulators to give them the answer-sheets for ethics exams. What did they bribe those public employees with? *Jobs at KPMG*:

https://www.pogo.org/investigation/2020/01/how-accountants-took-washingtons-revolving-door-to-a-criminal-extreme

There's hardly a month that goes by without another KPMG scandal somewhere in the world, with enormous monetary and social fallout. During the lockdowns, Justin Trudeau's Liberal government outsourced the creation and maintenance of ArriveCAN (a contact tracing app for people who entered Canada) to a grifter called GC Strategies, who billed millions for their services. GC Strategies didn't do any work - instead, they paid KPMG $1,000-$1,500 day to hire freelancers to build the app. The app itself was a catastrophic failure, and that failure didn't just embarrass the government - it also failed to protect Canadians during a once-in-a-century global pandemic. KPMG raked off a 30% commission:

https://pluralistic.net/2023/01/31/mckinsey-and-canada/#comment-dit-beltway-bandits-en-canadien

In the USA, KPMG helped Microsoft work up a radioactively illegal tax-evasion scheme. Microsoft poured the millions it saved by cheating on its taxes into dark-money operations that lobbied to defund the IRS so that KPMG and Microsoft could cook up even more illegal tax-evasion schemes:

https://www.propublica.org/article/the-irs-decided-to-get-tough-against-microsoft-microsoft-got-tougher

But KPMG doesn't content itself with screwing over everyday people and rotting our democratic institutions - it also engages in the dangerous business of helping billionaires steal from millionaires. KPMG was the auditor that signed off on the scam "oil company" Miller Energy Partners, a fraud that operated for years thanks to KPMG's rubber-stamp on its crooked books:

https://www.desmog.com/2021/06/03/miller-energy-kpmg-auditors-oil-fraud/

The company was run by serial fraudsters with long rapsheets for stealing millions. They staffed their C-suite with executives from disgraced companies that had been busted for running Ponzi schemes, issuing press releases praising those execs' "proven track records in raising capital." KPMG ignored every red flag, ignored the hundreds of millions in fraud on the books - and when the whole thing came crashing down, the responsible KPMG partner kept his job for years, until retiring with a full and fat pension.

More recently, KPMG made millions by confidently certifying the stability of a large regional bank, assuring investors and depositors that it was managing its risk and could be trusted. The name of the client that KPMG was so bullish on will be familiar to you: Silicon Valley Bank:

https://www.wsj.com/articles/kpmg-faces-scrutiny-for-audits-of-svb-and-signature-bank-42dc49dd

KPMG epitomizes the idea of Too Big To Fail and Too Big to Jail. Despite being at the center of virtually every major finance scandal, it continues to thrive and grow. Remember the Carillion bust, in which billions went up in smoke and swathes of privatized government services vanished overnight? Not only did KPMG sign off on fraudulent Carillion books, but it escaped fines for doing so - *and* got paid to help administer Carillion's bankruptcy:

https://www.reuters.com/business/finance/uk-watchdog-fines-kpmg-24-mln-over-carillion-regenersis-audits-2022-07-25/

Despite this, KPMG continues to find willing buyers for its services. After all, when the sector is dominated by four giant, lavishly corrupt firms, there's not much choice in the matter:

https://pluralistic.net/2022/11/29/great-andersens-ghost/#mene-mene-bezzle

This is bad news for the investor class, of course, but it's even worse news for the people who rely on the services that KPMG certifies, even as it helps grifters destroy them. Every kind of business relies on audits, from transit to aviation to day-care to *eldercare*.

Here's a scary one for you: in Australia, the job of auditing residential eldercare homes' compliance with safety and anti-abuse rules has been outsourced to KPMG. While KPMG earns a mid-sized fortune from these audits, it earns *far* more advising the owners of residential aged care homes on how to beat those audits:

https://www.theguardian.com/australia-news/2023/may/04/firm-performing-australian-aged-care-audit-also-charging-providers-for-expertise

KPMG says that the division that ensures the safety and dignity of elderly people is firewalled off from the division that advises companies on how to spend as little as possible on that safety and dignity - but KPMG also went to great lengths to keep the fact that it was selling services to both sides a secret.

Once the secret got out, an anonymous KPMG spokesmonster said, "When considering a request to perform an audit, we undertake a detailed process to ensure the engagement is free of conflicts."

It's hypothetically possible that this is true, but anyone who believes anything KPMG says is a sucker. The company's rap-sheet goes back *decades*. This is, after all, a company that cheated on its ethics exams.

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👩🏻‍🚒 Hey look at this

* ‘Too greedy’: mass walkout at global science journal over ‘unethical’ fees https://www.theguardian.com/science/2023/may/07/too-greedy-mass-walkout-at-global-science-journal-over-unethical-fees (h/t Interesting People list)

* Steamboat Willie Returns https://drive.google.com/file/d/1BkBVLb_uwjMrVNllo1f40j2UC7Fdh0ne/view

* Speed Trap https://www.theverge.com/23711172/google-amp-accelerated-mobile-pages-search-publishers-lawsuit

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👩🏻‍🚒 This day in history

#15yrsago The lost NY Times steampunk feature https://web.archive.org/web/20080511003859/http://charmandrigor.com/clips/self-steampunk.html

#15yrsago Kids’ game adds 500-1000 words to its forbidden list every day https://www.gamesindustry.biz/mmo-week-industry-has-been-irresponsible-with-kids

#10yrsago NewsCorp shareholders make another bid to democratize the Murdoch family empire https://www.theguardian.com/media/2013/may/08/rupert-murdoch-news-corporation

#10yrsago Welcome to the century of the copyright troll: Prenda Law was just the beginning https://www.eff.org/deeplinks/2013/05/prenda-law-tip-iceberg

#10yrsagoo HOWTO search the Web like the NSA https://www.wired.com/2013/05/nsa-manual-on-hacking-internet/

#5yrsago The most hated company in America is about to get much, much bigger https://www.vice.com/en/article/59qmqb/comcast-is-already-hatedand-its-about-to-become-a-lot-more-powerful

#5yrsago After the Boy Scouts opens up to trans kids, queer kids and girls, the Mormons severed their 105-year relationship to scouting https://www.cnn.com/2018/05/09/us/mormon-church-boy-scouts-cut-ties/index.html

#5yrsago Bumblefuck Watch: Rob Ford’s brother hired his own “reporter” to ask him scripted softball questions for literal fake news spots https://www.thestar.com/opinion/editorials/2018/05/06/doug-ford-evades-real-scrutiny-by-hiring-his-own-reporter.html

#5yrsago Colorado cop corrects would-be dog-slaughtering Illinois officer about drug-sniffing after marijuana legalization https://www.420magazine.com/420-news/international-cannabis-news/colorado-cop-debunks-illinois-cops-claim-that-legal-pot-would-lead-to-killing-of-police-dogs/

#5yrsago “Cocky” romance novelist embarks on a second career as a trademark troll: will romance writing fall from grace? https://www.theguardian.com/books/2018/may/08/romantic-novelist-trademarking-of-word-cocky-fameela-hopkins

#5yrsago Nova Scotia premier won’t apologise for libeling teen who discovered massive data breach https://www.cbc.ca/news/canada/nova-scotia/premier-stephen-mcneil-privacy-breach-freedom-of-information-portal-1.4653474

#5yrsago Nova Scotia abandons its attempt to destroy a teenager who stumbled on a wide-open directory of sensitive information https://www.cbc.ca/news/canada/nova-scotia/police-drop-charges-in-nova-scotia-government-breach-1.4651543

#5yrsago Revenge of the Laughable Bumblefucks: Rob Ford’s brother admits that actors were hired to pretend to be his supporters at rally https://www.thestar.com/news/gta/2018/05/08/doug-ford-campaign-confirms-actors-were-hired-to-play-the-part-of-pc-supporters-at-mondays-debate-rally.html

#5yrsago A new strain of IoT malware can survive a reboot https://www.bleepingcomputer.com/news/security/hide-and-seek-becomes-first-iot-botnet-capable-of-surviving-device-reboots/

#5yrsago Equifax lets identity thieves raid “frozen” credit reports through its shady, obscure secondary credit bureau https://krebsonsecurity.com/2018/05/another-credit-freeze-target-nctue-com/

#5yrsago Ticketmaster finds a new way to be terrible: facial recognition! https://www.engadget.com/2018-05-06-ticketmaster-hopes-to-speed-up-event-access-by-scanning-your-fac.html

#1yrago At the FTC, a quiet, profound shift on antitrust https://pluralistic.net/2022/05/09/rest-in-piss-robert-bork/#harmful-dominance

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👩🏻‍🚒 Colophon

Today's top sources: Karma Burrito (https://twitter.com/BurritoKarma).

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