(CN) - KPMG LLP has agreed to pay more than $6.2 million to settle charges it failed to properly audit financial statements of an oil and gas company, which skewed its reported value, the Securities and Exchange Commission announced.
John Riordan, KPMG's engagement partner in charge of the audit also agreed to settle charges against him.
When Miller Energy Resources hired KPMG as an outside auditor in 2011, KPMG issued an "unqualified audit report" for fiscal 2010 despite Miller's having overstated key Alaskan oil and gas assets at $480 million when they had been purchased for $4.5 million, according to the SEC's order.
The SEC's order states that KPMG "did not take sufficient action to determine that an appropriate response was taken by the engagement team regarding the risk of overvaluation of the Alaskan assets."
"Auditing firms must fully comprehend the industries of their clients. KPMG retained a new client and failed to grasp how it valued oil and gas properties, resulting in investors being misinformed that properties purchased for less than $5 million were worth a half-billion dollars," said Walter E. Jospin, Director of the SEC's Atlanta Regional Office.
The SEC's order finds that KPMG and Riordan engaged in improper professional conduct and caused Miller Energy's information reporting violations.
Miller Energy was chargedwith accounting fraud in 2015 and later settledthe charges, the SEC said.
William M. Uptegrove and John Nemeth conducted the SEC's investigation, and the case was supervised by Peter J. Diskin and Aaron W. Lipson of the Atlanta office.