KPMG Accounting Malpractice Verdict Affirmed but $38 Million Damage Award Vacated

A New Jersey appeals court has found sufficient evidence that accounting giant KPMG was negligent in its audits of the books of a ceramic collectibles company but inadequate proof to support a $38 million damages award to another company that acquired it. The panel said KPMG's spotty audit amounted to malpractice on a non-client, but found that the acquiring company and its president failed to prove that the combined company at the time of the merger was worth its purported value and to justify the jury's award.