KPMG is facing a criminal indictment from federal prosecutors for obstruction of justice and the sale of abusive tax shelters, the Wall Street Journalsaid today.
That would potentially kill off one of the four remaining big accounting firms, prompting an internal debate at the US Justice Department as to the desirability of that outcome, the report said.
Federal prosecutors and KPMG's lawyers are now locked in talks that could decide the fate of the firm, according to lawyers briefed on the case, the report added.
In a statement, KPMG said: "We remain in discussions with the Department of Justice and continue to cooperate fully in its investigation. KPMG looks forward to a resolution that recognizes the significant reforms the firm has already made in response to this matter while appropriately sanctioning the firm for this wrongdoing," the firm said.
KPMG said it took "full responsibility" for unlawful conduct by former partners during the 1996-2002 period. "We deeply regret that it occurred," the accounting firm said.
It said it no longer provides the services in question, has moved to "separate" those responsible for the firm, has instituted firm-wide reforms and undertaken significant change in its business practices.
The US Supreme Court recently reversed the conviction of the big accounting firm Arthur Andersen, which collapsed after being indicted by the Justice Department for obstruction of justice in connection with its role in the Enron scandal.