The Securities and Exchange Commission (SEC) has sued KPMG in connection with its role as auditor of Xerox, the US copy maker which engaged in a multi-billion dollar accounting fraud.

In the lawsuit the SEC said that KPMG partners failed to sound the alarm as Xerox falsely inflated revenues by $6.1bn (€5.6bn) and boosted profits by $1.9bn in the late 1990s. This was despite warnings from KPMG staff in other parts of the world, including Europe, that the Xerox accounting process was distorting its true business performance.