KPMG was the auditing company for New Century Mortgage. Were the buy backs of unacceptable or defaulted mortgages so well hidden by New Century Mortgage that one of the most influential auditing companies in the world could not find the discrepancies? The Public Company Accounting Oversight Board is looking into the practice and faulted KPMG LLP for some deficiencies in its audits of public companies, citing three instances in which the firm failed to obtain sufficient competent evidence to support its audit opinions. The name of the public companies was not included in the information, and neither were the deficiencies.

Critics are concerned the “Big Four” have a stranglehold on the market for auditing work and too much influence over REGULATORS. Is there too much power in too small of a pool? Does it limit competition and block the ability for oversight?

The big four, KPMG, PricewaterhouseCoopers, Ernst & Young and Deloitte, make only a fifth of their profits from statutory auditing work. The auditing companies are demanding their liabilities be capped, insisting they were no longer prepared to operate under unlimited liability, risking the same fate as Andersen, the auditing firm that imploded after the Enron scandal.

They were prepared before, what has changed for them now? Has a pattern emerged or a regulation requirement changed that sent them running scared?