CALIFORNIA MOVES AGAINST KMG MAIN HURDMAN
California regulators said they
were seeking disciplinary action against the accounting firm
KMG Main Hurdman as the result of a 1985 audit of Technical
Equities Corp., an investment firm that filed for bankruptcy
last year.
    A spokeswoman for the California Board of Accountancy,
which certifies public accountants and firms in the state, said
a six-page complaint was filed against the New York-based
accounting firm.
    "We basically charged that the Technical Equities audit was
not conducted in accordance with generally accepted auditing
standards," Della Bousquet, executive officer for the board,
told Reuters in a telephone interview.
    She said a hearing would probably be held before an
administrative law judge within three months. Penalties could
range from censure to revocation of KMG Main Hurdman's license
to do business in California.
    KMG Main Hurdman merged last week with Peat Marwick
Mitchell of New York to become the world's largest accounting
firm.
    The San Francisco office of the firm declined to comment on
the board's allegations.
    Bousquet said the company, among other things, was accused
of not properly investigating financial transactions and of
issuing a favorable opinion in August 1985 that relied on
misrepresentations of Technical Equities management.
    She said the accounting firm, although it knew Technical
Equities had severe cash flow and liquidity problems, was
accused of not performing a proper audit of it.
    The complaint named four individuals, including two
partners and two audit managers.
    Technical Equities, based in San Jose, filed for protection
under Chapter 11 of the bankruptcy laws in February 1986,
listing debts of 69.7 mln dlrs to 1,068 investors.
    Many of the investors were prominent sports and
broadcasting figures.
 Reuter
