The PCAOB reviewed just 76 of KPMG's 1,900 publicly traded clients between June and October 2004. Some of the failures by KMPG, according to the PCAOB, include not thoroughly evaluating some known or likely errors, not keeping crucial documentation, and not backing up its opinion with "sufficient competent evidential matter."

In a prepared statement, KPMG Chairman Timothy Flynn said, "KPMG is committed to the goal of continuous improvement in audit quality. We appreciate the constructive dialogue and consider it an important element in the process of improving our system of quality controls."

The Sarbanes-Oxley Act, which established the oversight board, requires the inspections. The PCAOB may not make certain criticisms public, however, so some portions of the KPMG report remain undisclosed. This report is the first of four reports that will inspect the nation's top four accounting firms. KPMG is the fourth-largest accounting firm. The remaining reports are expected in the coming weeks.

KPMG Inspection Report Sept 29 is available in PDF:
http://www.pcaobus.org/Inspections/Public_Reports/2005/KPMG_LLP.pdf