To rate the responsiveness of the 55 boards of accountancy, identical complaints were filed for significant cases involving the "Big Four" CPA firms:  Deloitte & Touche LLP, PricewaterhouseCoopers LLP, Ernst & Young LLP, and KPMG LLP.  Nearly all the cases reflected already-adjudicated findings of wrongdoing by courts or regulatory agencies.  The complaint letters were sent on June 16, 2008, with a follow-up letter on October 22.

___________________________________________________________________

     The complaint letter read:

Dear Board President:

             This is a complaint against CPA auditing firms Deloitte & Touche LLP,  PricewaterhouseCoopers LLP, Ernst & Young LLP, and KPMG LLP, and their individual CPAs involved in the cases cited below.

            All these complaints regard publicly-traded companies with the interests of the entire public of your states.  You have a duty to protect the public of your state—as investors, as employees, as customers, and as vendors.

            Virtually all of the cited cases have already been adjudicated.  You will be able to obtain all the facts from the relevant courts and law enforcement agencies.

             1.  Deloitte & Touche LLP

                        -- “Deloitte to Pay $38 Million In Deal With Delphi Investors”

                        -- “Deloitte Receives $1 Million Fine” from PCAOB

             2.  PricewaterhouseCoopers LLP

                        -- “Law Firms to Ask for $460 Million in Tyco-Case Fees” with
                            PWC paying $225 million

             3.  Ernst & Young LLP

                        -- “Cedant Case Costs Ernst Almost $300 Million More”

             4.  KPMG LLP

                        -- “Xerox, KPMG Settle Shareholder Suit”

                        -- “Inquiry Assails Accounting Firm In Lender’s Fall”

                        -- “Judge Fines KPMG Over Tactics In Accounting-Malpractice Suit”

                        -- Stipulated Settlement and Disciplinary Order of State of California,
                            regarding abusive tax shelters:  $1 million fine plus costs

             Please let me know the progress of your investigations and discipline.

                                                                                     Sincerely,

                                                                                     Carl Olson

Enclosures
____________________________________________________________________________

Findings as of April 15, 2009:

     1.  26 boards of accountancy never replied in writing to either letter.

     2.  29 boards of accountancy replied in writing.  None reported any disciplinary action on any cases against the Big Four's auditing.

        Three reported imposing fines on KPMG for its IRS phony tax shelters (California $1 million, Texas $100,000, and Washington $10,000).  One reported imposing a $50,000 settlement on Ernst & Young for lack of independence (Pennsylvania).

     The chart below reports on the individual board responses, including copies of all correspondence received from the board.

Board
(click for letters) 

Board of Accountancy action

Olson reply to November 17, 2008, letter:  "Most of all the companies that these auditing firms helped to deceive or mislead with their financial statements are publicly-traded companies.  This means that, in addition to the actual stockholders and bondholders for the time periods in the court and disciplinary cases, the entire investing public was misled.  Undoubtedly many pension funds (including state and local government pension funds) were adversely affected.  As for the KPMG tax shelter fraud, you well find several defrauded Colorado clients inasmuch as the victims were nationwide."

November 18, 2008: "A copy of the complaint has been forwarded to Deloitte & Touche LLP with a response to the allegations contained therein.  The complaint and response will be presented to the Board for consideration at its next scheduled meeting, following receipt of the response."

January 7, 2009:  "Re:  Deloitte & Touche LLP ... Please be advised that the Colorado Board has approximately 30 cases against these firms and in some instances, the cases are still pending given their complexity.  We intend to take action to address the issue(s) associated with the firms you reported to us."

November 3, 2008:  "The Division of Professional Regulation is in receipt of your letter of complaint against KPMG LLP. ... At the conclusion of the investigation, the Division, in consultation with the contact person, will determine whether to close the case or forward the case to the Attorney General for prosecution."

March 10, 2009:  "We have weighed all concerns involved in this matter and feel that the case warranted further review from the Office of the Attorney General to determine if there has been a violation of the laws, rules and regulations that govern the activities of our licensed professionals."  (KPMG)

June 10, 2009:  "As was reported in the previous notification to you, the case has been forwarded to the Office of the Attorney General for action.  Your case continues to be processed by that office.  We will notify you when further disposition of the case is available."

August 26, 2008:  "The Georgia State Board of Accountancy has concluded its review of your complaint about the above referenced subject [Deloitte & Touche LLP]. ... your complaint does not fall within the jurisdiction of the Georgia State of Accountancy; therefore the Board voted to close the case without action."

August 26, 2008:  "The Georgia State Board of Accountancy has concluded its review of your complaint about the above referenced subject [Ernst & Young LLP]. ... your complaint does not fall within the jurisdiction of the Georgia State of Accountancy; therefore the Board voted to close the case without action."

August 26, 2008:  "The Georgia State Board of Accountancy has concluded its review of your complaint about the above referenced subject [KPMG LLP]. ... your complaint does not fall within the jurisdiction of the Georgia State of Accountancy; therefore the Board voted to close the case without action."

August 26, 2008:  "The Georgia State Board of Accountancy has concluded its review of your complaint about the above referenced subject [PricewaterhouseCoopers LLP]. ... your complaint does not fall within the jurisdiction of the Georgia State of Accountancy; therefore the Board voted to close the case without action."

October 14, 2008:  "We have reviewed your complaint against the above named accounting firms regarding lawsuits that were filed. ... After reviewing your complaint, it appears the information you submitted is not sufficient to determine a licensing law violation on the part of Deloitte & Touche, LLP, PricewaterhouseCoopers, LLP, Ernst & Young, LLP, and KPMG, LLP."

June 24, 2008:  "Ernst & Young LLP. ... This letter acknowledges the receipt of your recent complaint. ... If the Department is unable to proceed with your complaint, you will receive a letter advising of such.  Should your complaint result in the opening of an investigation, you may be contacted by a Department investigator seeking additional information."

June 24, 2008:  "KPMG LLP. ... This letter acknowledges the receipt of your recent complaint. ... If the Department is unable to proceed with your complaint, you will receive a letter advising of such.  Should your complaint result in the opening of an investigation, you may be contacted by a Department investigator seeking additional information."

June 24, 2008:  "PricewaterhouseCoopers LLP. ... This letter acknowledges the receipt of your recent complaint. ... If the Department is unable to proceed with your complaint, you will receive a letter advising of such.  Should your complaint result in the opening of an investigation, you may be contacted by a Department investigator seeking additional information."

April 28, 2009:  "While not minimizing the seriousness of the recent judgments against these firms that you refer to in your complaints, the agency licenses firms practicing in Illinois (and under recent legislation, non-Illinois firms coming into Illinois), and while these national and international, Big Four firms have a presence in Illinois, these LLP entities are not licensed as CPA firms in Illinois.  Each of these firms has an Illinois unit or component, and this Illinois part of the world-wide firm has a firm license in Illinois.  Accordingly, the jurisdiction of this agency is only over the activity of the licensed Illinois component.  But we do not license any of these national firms composed of all its parts, however.  To our knowledge, none of the cases you refer to involved audits or other accounting engagements conducted or lead by the part of these firms licensed in Illinois, and none of the activity was in Illinois."

Olson Reply to March 13, 2009, letter:  "1.  I presume that the Big Four are licensed in Maryland.  2.  The public of Maryland was injured by the CPA firms because the cases involve the Big Four's audits of publicly-traded companies.  Undoubtedly the damages to the stockholders and others for these publicly-traded companies befell Maryland's residents, as it did to the rest of the investing world.  I presume that your board's mandate is to protect the public's interest, not just the client's interest.  3.  CPA auditors have wide-ranging fiduciary duties.  This legal doctrine is reflected in the U. S. Supreme Court decision of U.S. vs. Arthur Young & Co.:  'The independent public accountant performing this special function owes ultimate allegiance to the corporation's creditors and stockholders, as well as the investing public.'"

Olson reply to June 30, 2008, letter:  "The audit firms of Deloitte & Touche LLP, Ernst & Young LLP, KPMG LLP, and PricewaterhouseCoopers LLP operate in Nebraska.  The companies in the complaint are publicly-traded (Tyco International, Cedant, Delphi, Xerox, etc.).  They therefore involve the public investors of Nebraska which have lost innumerable investments because of these debacles.  With regard to the phone tax shelters of KPMG, the victims could reside in any state.  The Public Company Accounting Oversight Board (PCAOB) supervises audit firms for publicly-traded firms, including the investing public of Nebraska."

November 20, 2008:  "After careful review of the information provided, the Board concluded that no New Hampshire licensees were identified as participants; therefore we must close the matter...."

Olson reply to December 9, 2008 letter:  "You imply that the Board of Accountancy does not license CPA firms, but rather only individual CPAs.  Is this the fact?"

October 30, 2008:  "During the September meeting, the Board did not initiate any action in the matter.  Although these firms provide service in this state, there is no substantive presence, such as a formal office.  Your letter indicated that most all matters have been adjudicated.  In one or more cases, another board of accountancy has exacted penalties in connection with their practice.  Initiating additional action would constitute duplicative investigation and disciplinary measures."

July 16, 2008:  "This letter will acknowledge receipt of your formal complaint filed against ERNST & YOUNG LLP. ... Complaint File Number 08-55-06822 has been assigned to this matter.  Please disregard the previous file number given, 04-55-09968, in the letter dated July 9, 2008."

October 30, 2008:  "The State Board of Accountancy received your letter of October 22, 2008 regarding your complaints against the firms of Deloitte & Touche, LLP, PricewaterhouseCoopers, LLP, Ernst & Young, LLP and KPMG, LLP and their individual CPAs.  Our Professional Compliance Office handles complaints that are received regarding licensees of the Pennsylvania State Board of Accountancy.  Your letter dated June 16, 2008, if received in this office, would have been referred to the Professional Compliance Office and therefore would not be in the Board Office."

March 12, 2009:  "This letter is in reference to your complaint against the accounting firm of Ernst & Young, filed with the Pennsylvania State Board of Accountancy on October 27, 2008.  In Pennsylvania, the substance of your complaint--the independence of auditing firms from their corporate clients--was addressed via a mediation agreement concluded between Pennsylvania and Ernst & Young, and publicly announced in December 2008 (file no. 04-55-09968).  The agreement required Ernst & Young to finance a continuing education course on the independence of auditors for the benefit of Pennsylvania accountants, and to make a $50,000.00 grant to a local community college in order to finance an ethics course in accounting."

Olson reply to November 24, 2008, letter:  "Does Rhode Island license CPA firms as well as individuals?"

November 10, 2008:  "Thank you for providing information on four (4) firms included in your correspondence.  We will look into all the issues raised to determine if Texas CPAs are involved."
 

October 27, 2008:  "Thank you for communicating with the Virginia Board of Accountancy (Board) regarding your complaint against Deloitte & Touche LLP, PricewaterhouseCoopers LLP, Ernst & Young LLP, and KPMG LLP. ... The case involving the abusive tax shelters with KPMG has been adjudicated by the Virginia Board of Accountancy and closed."

Deloitte & Touche LLP  --  I evaluated the audits of Delphi Corp. and Ligand Pharmaceuticals Inc. and considered the actions of the SEC and PCAOB sufficient discipline for purposes of public protection of the Washington citizens.  No Washington licensees were identified as participants in these audits.

PricewaterhouseCoopers LLP -- I evaluated the audit of Tyco International Ltd. and considered the class action settlement and actions of SEC sufficient discipline for purposes of the public protection of Washington citizens.  No Washington licensees were identified as participants in the audit.

Ernst & Young LLP -- I evaluated the audit of the subsidiary of Cedant Corp. and considered the results of the class action settlement and actions of the SEC sufficient discipline for purposes of the public protection of the Washington citizens.  No Washington licensees were identified as participants in this audit.

KPMG LLP -- I evaluated the audits of Xerox Corp. and considered the results of the class action settlement and actions of the SEC sufficient discipline for purposes of the public protection of the Washington citizens.  No Washington licensees were identified as participants in this audit.  No Washington licensees were identified in the audit of Targus Group.  Board staff is monitoring the outcome of the New Century Financial audit for future investigation.  The KPMG abusive tax shelter cases were investigated by the board.  KPMG accepted the settlement with the State of Washington, resulting in a fine of $10,000.

Complaint letter dated October 22, 2008:

The Board is currently tracking all allegations regarding audits of the financial statements of companies involved in the financial collapse of 2008.  Investigations will be opened as circumstances indicate action by the Board is warranted.  I opened an investigation into the allegations of audit failures by Deloitte & Touche LLP regarding the financial statements of Washington Mutual."

March 12, 2009:  "In our July 2008, letter we indicated that the Accounting Examining Board Screening Panel had already reviewed these particular complaints.  In each of these cases, it was the screening panel's decision to not open these for investigation.  It was their opinion that there was insufficient evidence that a violation of the Wisconsin statutes and/or rules regulating this profession had occurred and that the time and expense of investigating these matters, after they had been to court, would not necessarily mean further discipline of these entities by our state."

October 28, 2008:  "Please be advised that additional contacts referencing the information provided in June of 2008 will not be considered by this office nor will the Board respond to any additional contacts suggesting the Board initiate discipline based on matters not officially before the Board."