SEC Settles Charges Against Accounting Firm For Conducting Improper Audit

The SEC settled charges against an accounting firm for failing to properly audit an oil company in 2011.

According to an Order Instituting Proceedings, KPMG was hired to audit Miller Energy Resources, Inc. ("Miller") for fiscal year 2011 following Miller's acquisition of oil and gas interests in Alaska ("Alaska assets"). Miller acquired the Alaska assets for $4.5 million and reported the value of the assets as $480 million, a valuation that the SEC characterized as "violat[ing] generally accepted accounting principles" and "overstat[ing] the fair value of the assets by hundreds of millions of dollars." Despite the significantly inflated valuation, KPMG issued an unqualified audit report of Miller's financial statements for fiscal year 2011.