Audit Firm: FIFA scandal

The Fédération Internationale de Football Association (FIFA) is an association governed by Swiss law founded in 1904 and based in Zurich. It has 209 member associations and its goal, enshrined in its Statutes, is the constant improvement of football.

KPMG was appointed as the auditor of FIFA in 1999; a year after Sepp Blatter (the ex-president of FIFA) took charge of the FIFA president office. KPMG began auditing FIFA’s accounts and they have had the contract ever since.

Recently a scandal of corruption and bribery emerged in the Football Body. The US Department of Justice has indicted a total of 14 current and former FIFA officials and associates on charges of "rampant, systemic, and deep-rooted" corruption following a major inquiry by the Federal Bureau of Investigation (FBI).The US indictment alleged that US and South American sports marketing executives paid and agreed to pay "well over $150m" in bribes and other illegal payments to obtain lucrative media and marketing rights to international football tournaments. That does not include other possible alleged corruption around the world.

According to FIFA 2014 Annual Report, all member associations and confederations have to provide FIFA with an audited financial statement every year. Additionally, FIFA arranges a central audit of 40 member associations and one confederation each year through its statutory auditors KPMG to verify that all financial assistance payments are in compliance with the FAP (Financial Assistance Programme) Regulation.

The question arise that why the auditor of FIFA, KPMG Switzerland not been able to ask pertinent questions about the corruption and bribery issues going on in the football body. After when the issue became public, a review of the audit work performed by KPMG Switzerland has begun and it is going to be conducted in consultation with KPMG International.

Additional Thoughts

Audit firms should stay skeptical about any mismanagement going on in the organization which they are auditing. If the detection of fraud doesn’t come under the purview of a statutory audit they can still ask the organization for conducting a forensic audit if they consider any allege fraud matter material enough. Management letter of weakness can be used as an effective tool for communicating with those charged with governance and advising them of any particular control weaknesses the auditors have identified during the audit, and suggestions to remedy these.