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San Diego, May 28 (Bloomberg) -- Peregrine Systems Inc. fired KPMG LLP as auditor after one month because some of the business- software maker's revenue that must be restated was from transactions with KPMG and its former consulting unit.
About $35 million of $100 million in ``questionable transactions'' were made with KPMG and KPMG Consulting Inc., said MeeLin Nakata, a spokeswoman for Peregrine. Peregrine hired KPMG after firing Arthur Andersen LLP in April. KPMG, which spun off KPMG Consulting last year, found errors in booking revenue that led Peregrine to restate three years of results.
Peregrine, whose software lets businesses track assets such as computers and vehicles, this month said the Securities and Exchange Commission started a formal accounting investigation. Peregrine said keeping KPMG as auditor would compromise SEC auditor-independence rules because of the deals with KPMG.
The U.S. Court of Appeals for the D.C. Circuit this month upheld a 16-month-old SEC ruling that KPMG failed to keep its independence in a 1995 audit of Porta Systems Corp., a telecommunications company based in Syosset, New York. Porta's temporary president had a $100,000 loan outstanding from KPMG.
John Schneidawind, a spokesman for McLean, Virginia-based KPMG Consulting, declined to comment on Peregrine's firing of KPMG. Spokespeople for KPMG didn't immediately return phone calls.
Peregrine's audit committee hired PricewaterhouseCoopers LLP, the world's largest accounting firm, to complete Peregrine's internal investigation. A search for a new auditor was started.
The shares of San Diego-based Peregrine fell 16 cents to $1.50 in midday trading. They had plunged 89 percent this year as the company said some sales to resellers and other businesses may have been inflated. Chief Executive Officer Steve Gardner and Chief Financial Officer Matt Gless quit this month.
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