SEC Charges Three Former KPMG Audit Partners for Exam Sharing Misconduct
Three former KPMG audit partners—Timothy Daly, Michael Bellach, and John Donovan—were charged by the SEC for sharing answers to internal training exams and obstructing the investigation by deleting texts and lying, resulting in suspensions of three, two, and one year respectively from practicing before the SEC.
The SEC charged former KPMG audit partners Timothy Daly, Michael Bellach, and John Donovan with violating PCAOB rules on professional integrity by sharing answers to internal training exams and obstructing the firm’s investigation. Daly and Bellach exchanged exam questions and answers via text in October 2018, then deleted the messages after KPMG issued a document preservation notice, with Daly urging Bellach to destroy the evidence; both falsely denied involvement to investigators. Donovan received and distributed exam answers multiple times between April and September 2018 and also lied about his conduct. All three agreed to suspensions from appearing before the SEC—three years for Daly, two for Bellach, and one for Donovan—without admitting or denying the findings.
The SEC charged three former KPMG audit partners—Timothy Daly, Michael Bellach, and John Donovan—for improperly sharing answers to internal training exams and obstructing the firm’s investigation by deleting communications and lying to investigators. In October 2018, at Daly’s request, Bellach sent him images of exam questions and answers via text; after KPMG issued a document preservation notice, Daly deleted the messages and pressured Bellach to do the same, while both falsely claimed they had never received or shared answers. Between April and September 2018, Donovan repeatedly received exam answers from subordinates and shared them with his team on multiple occasions, yet also denied any involvement during the investigation. The SEC found their conduct violated PCAOB Rule 3200, which requires integrity in professional services, undermining the credibility of audit training and financial reporting oversight. Without admitting or denying the allegations, the partners agreed to suspensions from appearing or practicing before the SEC: Daly for three years, Bellach for two, and Donovan for one, effectively barring them from participating in public company audits during those periods. The SEC emphasized that audit professionals serve as critical gatekeepers to investor protection, and this case reflects its commitment to holding them accountable for breaches of professional duty. KPMG had previously been charged by the SEC for related misconduct, including altering audit work after learning of impending PCAOB inspections, underscoring systemic integrity issues within the firm at the time.
Exhibits & Attached Documents (3)
Extracted insights
- company conduct of former audit partners
- person john donovan
- person kpmg investigators
- agency Securities and Exchange Commission
- agency suspension from appearing or practicing before the sec
- company three former kpmg llp audit partners
- person timothy daly
- SEC announced settled charges against Three Former KPMG LLP Audit Partners
- SEC charged KPMG
- Timothy Daly, Michael Bellach, and John Donovan engaged in Misconduct
- Bellach texted Images of Training Examination Questions and Answers to Timothy Daly
- Timothy Daly deleted Text Messages from Bellach
- Timothy Daly falsely told KPMG Investigators
- Timothy Daly encouraged Michael Bellach to Delete Text Messages
- John Donovan supported Sharing of Exams and Answers
- John Donovan received Answers to Training Exams
- John Donovan falsely told KPMG Investigators
- Conduct of Former Audit Partners violated PCAOB Rule
- Timothy Daly, Michael Bellach, and John Donovan agreed to Suspension from Appearing or Practicing before the SEC
The Securities and Exchange Commission today announced settled charges against three former KPMG LLP audit partners for improperly sharing answers to internal training exams and for subsequent wrongdoing during an investigation of exam sharing misconduct at the firm. The SEC previously charged KPMG with violations concerning the exam sharing misconduct, as well as for altering past audit work after receiving stolen information about inspections that would be conducted by the PCAOB. According to the SEC’s orders, former KPMG audit partners Timothy Daly, Michael Bellach, and John Donovan each engaged in misconduct in connection with exams KPMG administered to test whether its audit professionals understood certain accounting and auditing principles. The orders against Daly and Bellach find that in October 2018, at Daly’s request, Bellach texted Daly images of the questions and answers to a required training examination. After KPMG began investigating possible cheating by its professionals and required strict compliance with a document preservation notice sent to all KPMG personnel, Daly deleted the text messages from Bellach and falsely told KPMG investigators he had not received any answers to KPMG training exams. The orders further find that Daly encouraged Bellach to delete the text messages as well, which Bellach did after receiving KPMG’s document preservation notice. The order against Donovan finds that he also supported the sharing of exams and answers within his team. According to the order, between April and September 2018, Donovan received answers to training exams from subordinates on several occasions, and shared answers with his team three times. Donovan also falsely told KPMG investigators that he had not sent, received, or shared answers. “Audit professionals play a critical role in the integrity of the financial reporting process and the protection of investors,” said Steven Peikin, Co-Director of the SEC's Division of Enforcement. “These actions reflect our commitment to hold these gatekeepers responsible for breaches of their professional obligations.” The SEC’s orders find that the former audit partners’ conduct violated a PCAOB Rule requiring them to maintain integrity in the performance of a professional service. Without admitting or denying the findings, Daly, Bellach, and Donovan agreed to be suspended from appearing or practicing before the SEC as an accountant, which includes not participating in the financial reporting or audits of public companies, with the right to apply for reinstatement after three years, two years, and one year, respectively.
The Securities and Exchange Commission today announced settled charges against three former KPMG LLP audit partners for improperly sharing answers to internal training exams and for subsequent wrongdoing during an investigation of exam sharing misconduct at the firm. The SEC previously charged KPMG with violations concerning the exam sharing misconduct, as well as for altering past audit work after receiving stolen information about inspections that would be conducted by the PCAOB. According to the SEC’s orders, former KPMG audit partners Timothy Daly, Michael Bellach, and John Donovan each engaged in misconduct in connection with exams KPMG administered to test whether its audit professionals understood certain accounting and auditing principles. The orders against Daly and Bellach find that in October 2018, at Daly’s request, Bellach texted Daly images of the questions and answers to a required training examination. After KPMG began investigating possible cheating by its professionals and required strict compliance with a document preservation notice sent to all KPMG personnel, Daly deleted the text messages from Bellach and falsely told KPMG investigators he had not received any answers to KPMG training exams. The orders further find that Daly encouraged Bellach to delete the text messages as well, which Bellach did after receiving KPMG’s document preservation notice. The order against Donovan finds that he also supported the sharing of exams and answers within his team. According to the order, between April and September 2018, Donovan received answers to training exams from subordinates on several occasions, and shared answers with his team three times. Donovan also falsely told KPMG investigators that he had not sent, received, or shared answers. “Audit professionals play a critical role in the integrity of the financial reporting process and the protection of investors,” said Steven Peikin, Co-Director of the SEC's Division of Enforcement. “These actions reflect our commitment to hold these gatekeepers responsible for breaches of their professional obligations.” The SEC’s orders find that the former audit partners’ conduct violated a PCAOB Rule requiring them to maintain integrity in the performance of a professional service. Without admitting or denying the findings, Daly, Bellach, and Donovan agreed to be suspended from appearing or practicing before the SEC as an accountant, which includes not participating in the financial reporting or audits of public companies, with the right to apply for reinstatement after three years, two years, and one year, respectively.