April 28, 2023
SVB’s Auditors Get Sued
CFO Dive recently reported that a new lawsuit against SVB now names KPMG as one of the defendants, noting that the firm’s audit opinion issued only a few weeks before the bank’s collapse was silent on whether there was any doubt about SVB’s ability to continue as a going concern. Here’s an excerpt from the article, highlighting that the claims have renewed conversations about long-tenure and independence:
Even prior to the lawsuit, the short window between the audit and the bank run raised questions of how SVB’s auditors could have missed the signs of its impending doom so close to the collapse.
Previously KPMG has defended its work and CFO Dive reported that a KPMG spokesperson wrote that the firm conducts its audits in accordance with professional standards and noted that audit opinions are based on evidence available up to and at the date of the opinion.
However, the Silicon Valley matter has also spotlighted KPMG’s long tenure of 29 years working for SVB, raising the specter of whether cozy auditor-client relationships can cut into the rigor of audits. Although there are no regulations in the U.S. that limit the number of years that auditors can provide their services to clients, U.S. regulators have long contemplated limiting how long auditors can do so.
– Meredith Ervine