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The Impact of Insider Trading Scandals - The Way Forward for Accounting Firms

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by Saranya Sundararajan
23 April 2015

The recent insider trading scandal, involving the lead partner of KPMG sharing privilege information about a few of their audit clients to his friend, and helping him gain illegal profits, has created a wave of doubt on auditor independence. Such incidents involving the audit partners engaging in insider trading activities are continuously increasing. This time, the Public Company Accounting Oversight Board (PCOAB) is likely to strengthen and mandate its proposal made in October 2011, specifically in US, where the audit firms would be required to disclose the name of the lead partner in the audit report. This article focuses on the understanding the implications of such insider trading activities on the audit firms, the proposed change in regulations and the steps taken by the audit firms to prevent such malpractices.

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