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.
