, Columnist
Why Was KPMG Still Auditing Silicon Valley Bank?
Long-term client relationships are a known risk to audit quality. KPMG’s near 30-year run at SVB demands a fresh look at the issue.
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KPMG LLP began auditing Silicon Valley Bank in 1994. Why was it still there in 2023?
The firm signed off on SVB’s accounts shortly before the lender attempted an emergency capital increase that triggered a run by depositors. But SVB’s vulnerability was in the numbers. Liabilities comprised a big chunk of corporate deposits. These funded assets including long-dated bonds whose market value was below par. The risk was that a forced sale of those assets, to meet deposit withdrawals or rotate into shorter-dated assets, would crystalize a loss and deplete capital. And that’s what happened.