KPMG served as the external auditor for three failed US banks: Colonial Bank, Guaranty Bank, and TierOne Bank, where their inability to detect accounting errors resulted in billions of dollars in losses for investors, customers, and the FDIC, prompting lawsuits and regulatory attention.
Three bankrupt US banks, Colonial Bank, Guaranty Bank, and TierOne Bank, all had one thing in common: they were all audited by KPMG. KPMG is one of the Big Four accounting organizations that provides auditing, tax, and advice services to businesses throughout the world. In the case of these three banks, however, KPMG failed to detect the accounting problems that ultimately contributed to their demise. These bank failures cost investors, customers, and the Federal Deposit Insurance Corporation (FDIC) billions of dollars in losses. For its role in the mistakes and its handling of the audits, KPMG faced litigation and regulatory scrutiny. The instances serve as a warning about the need of external audits as well as the need for accountability and openness in government.