According to Comtech Telecom (NASDAQ:CMTL), it has been advised by KPMG that one of KPMG's staff auditors on the Comtech account has invested in Comtech's stock, "and this matter raised a question as to whether KPMG's independence has been impaired.
Wondering whether its independence has been impaired?! Hello! Anybody home?!
According to Glass Lewis' Lynn Turner, former chief accountant of the SEC: "Anyone who has taken the introductory auditing class understands that an auditor's independence is impaired when one of the auditors on the audit team have invested in the very company being audited.
"Equally important, it raises the question of whether this is (1) a lack of training (doubtful given this is suppose to be taught in college), (2) a lack of adequate monitoring systems (doubtful since the auditor knew which audit he or she was on) or (3) a case where the individual should be officially sanctioned by ALL OF the firm, the PCAOB and SEC for the behavior and the position it has put the firm in."
But don't worry, KPMG will have it figured out in due course. Until then, Comtech's 10-Q will be delayed. You're in good hands...
Update: KPMG says its independence wasn't compromised. A spokesman says the employee was fired. For more detail, read here.