Also, nine individuals, including six former KPMG partners and the former deputy chairman of the firm, face criminal charges for designing and marketing fraudulent tax shelters and defrauding the Internal Revenue Service from 1996 to 2002.

In a statement Monday, KPMG said: "All of the individualsIindicted today are no longer with the firm. KPMG has put in place a process to ensure that individuals responsible for the wrongdoing related to past tax shelter activities are separated from the firm."

The settlement requires an acknowledgement of wrongdoing. The U.S. accounting firm will make three monetary payments over time to the U.S. government. The $456 million fine includes $128 million in forfeited fees that KPMG earned by selling the fraudulent tax shelters.

Richard Breeden, a former Securities and Exchange Commission chairman, has been selected to independently monitor compliance with the agreement for a three-year period.

In an IRS statement, Commissioner Mark Everson said, "KPMG has admitted that it engaged in a fraud that generated at least $11 billion dollars in phony tax losses which, according to court papers, cost the United States at least $2.5 billion dollars in evaded taxes."

Federal prosecutors agreed not to prosecute KPMG unless it violates its agreement with the government and commits further wrongdoing.

The charges will be formally dismissed on December 31, 2006, when the firm complies with the terms of the agreement. If the firm commits wrongdoing before that date, however, federal prosecutors can seek an indictment of the firm.

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