Less than two months after hiring KPMG to replace Arthur Andersen,
software vendor Peregrine Systems is firing the auditor, citing
past dealings with KPMG that may violate US Securities and Exchange
Commission (SEC) requirements for auditor independence.
Peregrine dropped Andersen in early April, attributing the change
to "current uncertainties" about Andersen in the wake of the Enron
debacle.
Not long after, Peregrine was enmeshed in an accounting tangle of
its own, where revenue of up to $100m may have been improperly
booked during the financial years 2001 and 2002. Peregrine's chief
executive officer and chief financial officer resigned, spurring
investigations by both the SEC and Peregrine's audit
committee.
KMPG had begun the internal investigation, which will now be
conducted by PricewaterhouseCoopers, Peregrine announced.
Last week, the company extended the time frame during which it
believed accounting improprieties occurred, announcing plans to
restate its financial results for 2000, 2001 and the first
three-quarters of its 2002 financial year.
The contested revenue relates to transactions recorded as revenue
from Peregrine's indirect channels that may have been written off
in later quarters, according to the company.
The conflict with KPMG stems from past business dealings between
Peregrine, KPMG and KPMG Consulting, a now-independent spin-off
from KPMG that went public in 2001.
"KPMG informed Peregrine that approximately $35m of the
questionable [$100m] transactions were with KPMG and KPMG
Consulting," Peregrine said in a statement. Peregrine officials
declined to elaborate on how the $35m was generated. The company
offered no comment beyond its press release.
Peregrine said that it believed its dealings with KPMG and KPMG
Consulting compromise SEC rules regarding auditor independence.
A search for new independent auditors is under way.