It was a stern reminder the Securities and Exchange Commission sent to the auditing world recently: Appearances do matter.
The agency delivered a $10 million rap on the knuckles to KPMG on Oct. 20, for ignoring improper revenue statements from its client Gemstar-TV Guide International. The inflated revenues themselves weren’t much: $212 million from late 1999 to early 2002, a period when Gemstar’s total revenues topped $3.43 billion. Instead, SEC officials punished KPMG because the misstatements were qualitatively material, troubling more for their meaning than their size.
