It now appears that KPMG systematically helped New Century Financial, a mortgage lender, conceal its financial troubles.

New Century Financial, whose failure just a year ago came at the start of the credit crisis, engaged in “significant improper and imprudent practices” that were condoned and enabled by auditors at the accounting firm KPMG, according to an independent report commissioned by the Justice Department.

This is what killed Arthur Anderson.

The specifics:

• KPMG auditors raised red flags, but KPMG partners rejected them because they, “feared losing a client.”
• The accounting changes converted a loss ot a profit in the 2nd half of 2006.
• These “profits” meant large executive bonuses
• They also misled Wall Street about the status of the company and artificially inflated the stock price.

FWIW, I disagreed with the Supreme Court decision exonerating Arthur Anderson.

The only we get honest audits is if there is a threat of a corporate death penalty hanging over these folks heads.