KPMG believes that Peregrine is guilty of a number of financial irregularities such as the misrepresentation of acquisition costs and the failure to disclose secret side deals where corporate customers were exempted from payment. KPMG said these misdemeanours obstructed its audit of Peregrine, resulting in KPMG being unable to complete its audit before being dismissed as company auditors in May.
The SEC is currently undertaking a formal investigation into accounting practices at Peregrine. If the SEC decides that Peregrine has purposely misstated revenues or committed other acts of fraud, the matter could be taken to the US Department of Justice, who may chose to begin a criminal investigation.
