KPMG accused over US fraud

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An independent report commissioned by the US Justice Department says KPMG either initiated the accounting fraud or stood by while it was going on in 2005 and 2006. New Century filed for bankruptcy protection a year ago.

The report says New Century "engaged in a number of significant improper and imprudent practices related to its loan originations, operations and financial reporting".

It adds that KPMG contributed to some of these accounting and financial errors "by enabling them to persist and, in some instances, precipitating the company's departures from applicable accounting standards".

KPMG denies the allegations. A spokesman said: "We believe that an objective review of the facts and circumstances will affirm our position."

More than 450 companies and individuals who are suing New Century may now also take action against KPMG.