KPMG AUDIT STINK Execs in fraud rap

They stole the test before the exam — so of course they got good grades.

High-ranking executives at accounting giant KPMG repeatedly coerced a regulator to hand over tips on upcoming audits — thus ensuring the firm wouldn’t get called out for shoddy work, federal prosecutors charged on Monday.

Three longtime KPMG executives, a former regulator who got a job at the firm and a second regulator who had applied for a position at the Big Four firm were charged in Manhattan federal court with conspiracy, wire fraud and misusing confidential information, according to the criminal indictment.

A sixth person, Brian Sweet, the former director of inspections at the regulator, the Public Company Accounting Oversight Board, pleaded guilty to a single conspiracy count and is cooperating with prosecutors.

The regulator, known as “Peekaboo,” was formed after the accounting scandals at Enron and WorldCom. The black eye will do little to help its reputation as a weak regulator.

The Securities and Exchange Commission filed a parallel civil case.

“These accountants engaged in shocking misconduct — literally stealing the exam,” Steven Peikin, co-director of the SEC’s enforcement division, said in a statement.

KPMG was not charged with any wrongdoing.

The accounting firm, which in 2015 had suffered through years of poor grades from PCAOB, decided to hire Sweet that year to turn things around.

As Sweet was just about to exit the regulator, he copied PCAOB data onto a thumb drive. Once at KPMG, he immediately began to share that info with KMPG brass.

Knowing which documents were going to be audited, KPMG had time to prepare, according to court papers.

Sweet then brought a second regulator, Cynthia Holder, to KPMG, it is alleged. Before she joined the firm, Holder e-mailed Sweet a confidential PCAOB file — complete with a “winking smiley face” emoticon, it is alleged.

The sting also ensnared one of the highest-ranking executives at KPMG — David Middendorf, a former lead director of the board, and the company’s global managing director for audit quality and professional practice, according to the complaint.

Indicted were KPMG execs Holder, Middendorf, Thomas Whittle and David Britt. They were fired when their roles in the alleged scam were first learned.

Jeffrey Wada, a regulator, was also indicted.

“When KPMG first discovered the issue in early 2017, we promptly notified the authorities and have been fully cooperating,” KPMG said in a statement.