Accounting firm in hot SC water
According to Wednesday’s Wall Street Journal , accounting firm KPMG LLP soon may be barred from representing taxpayers in disagreements before the SC Department of Revenue.
At issue mostly is the tax–shelter sales program at KPMG.
KPMG is the same firm Columbia engaged for a convention center feasibility study, published in 1996. KPMG predicted a construction cost of $150 per square foot or $15 million for 100,000 square feet. By 2001, Columbia declared a larger facility of 142,500 square feet, which just opened last week. The 2001 construction cost, locked in until completion, concluded well beyond KPMG’s predictions.
At $150 per square foot in 1996, the convention center construction cost should have followed a yearly inflation rate of maybe 3%, compounding annually until 2001. At that rate, the 2001 cost came to $174 per square foot. The contracted 2001 cost for the built 142,500 square feet was $37.4 million, or $262 per square foot, not the predicted $174 in 2001 dollars. Somebody, the city or KPMG, was off by $12,605,000 in 2001.
KPMG was replaced in 1999 by Atlanta’s Strategic Advisory Group, the same firm used by Myrtle Beach.
In its discussions with the SC Department of Revenue, KPMG is finding itself in its first disciplinary action by a government body over the firm’s sales of allegedly abusive tax shelters, as the Wall Street Journal put it.
In New York, KPMG’s tax–shelter practices are under a federal grand jury criminal investigation.
And in Myrtle Beach this November, the convention center headquarters hotel, the Radisson, is offering rooms for $59 a night.