No one has challenged the accuracy of the annual reports of the body, FIFA, which are prepared according to international accounting standards by KPMG’s office in Zurich, where FIFA is based. But that only heightens the puzzling disconnect between the different pictures that are emerging of FIFA as an organization: riddled with bribes and kickbacks in the view of prosecutors yet spotless according to the outsider most privy to its internal financial dealings.
Andreas Hammer, a Zurich-based spokesman for KPMGâs Swiss offices, declined to comment, saying in an email that âas FIFAâs statutory auditor, we are bound by professional confidentiality and have to refrain from any comment regarding our client.â
As FIFA’s first and only outside auditor, KPMG has counted FIFA as a client since 1999, one year after Sepp Blatter, who resigned abruptly on Tuesday as president just days after being re-elected to a fifth consecutive term, began his tenure. KPMG took on a client long criticized for its lack of transparency and its corporate governance issues.
Over its most recent four year-financial cycle, 2011 to 2014, FIFA had $5.7 billion in revenue, mostly from the sales of rights to marketing, licensing, television broadcasting and hospitality, and more than $5.4 billion in expenses. It has reserves of more than $1.5 billion. Referring to its “internal controls system,” or I.C.S., intended to root out fraud, FIFA wrote in its 2009 annual report that “communication with KPMG is extremely important for the members of the internal audit committee because KPMG as external auditors have a very detailed picture of the FIFA I.C.S. following the in-depth audits that they have performed.”
Mr. Neininger has been the auditor-in-charge of FIFA’s annual report since 2011, though the 2014 report omits that title. His role at the closed-door sessions - to recommend that FIFA’s executive committee approve KPMG’s sign-off on the year’s annual report - sent a particularly clear signal this year: KPMG was standing by its client.
Accounting firms often contend that their audits are only as good as the information they receive from their clients, but they are also supposed to recognize patterns or anomalies that suggest they should dig a little deeper.
Heather Lowe, the director of government affairs for Global Financial Integrity, a left-leaning research group in Washington that focuses on illicit money flows, said that an auditing firm âonly knows what information itâs givenâ by its client âunless it has a reason to ask for more information.â
She added: “Given the prior allegations, did KPMG do anything differently?”
A key element in the Justice Departmentâs case is a $10 million payment that prosecutors say was transferred in 2008 from FIFA to accounts controlled by a soccer official, Jack Warner, as a bribe in exchange for helping South Africa secure the right to host the 2010 World Cup.
Mr. Epstein said that while the $10 million payment could be insignificant, or immaterial in accounting terms, given FIFA’s size, it would not be immaterial in qualitative terms. “That’s something people would want to know about,” he said.
KPMG had questioned another payment a decade earlier. In a 1999 “Revised Audit Management Letter” sent to FIFA, KPMG noted an unusual payment in connection with the Confederations Cup - an important tournament involving soccer’s continental champions that is now held the year before the World Cup. “To cover the excess expenditure at the Confederations Cup in Saudi Arabia, the organizer has made an additional payment of 470,000 Swiss francs,” the letter, obtained by the independent journalist Andrew Jennings, says in German. “The payment was authorized by the president of FIFA, but without the authorization of the finance committee or the executive committee.”
It is unclear to whom the payment was made or which Confederations Cup in Riyadh was involved â Saudi Arabia hosted them in 1995 and 1997, part of the four-year financial cycle covered in the 1999 letter. A spokeswoman in FIFA’s Zurich office was not available to comment.
Even before the indictments, there was no shortage of potential red flags, though it is unclear whether any of them raised concerns for KPMG or prompted it to investigate.
In 2002, Michel Zen-Ruffinen, FIFA’s secretary general at the time, wrote an explosive report accusing Mr. Blatter and his lieutenants of extensive fraud. The report, parts of which were published in the Swiss news media, contended that from 1999 to 2002, FIFA, which was struggling financially at the time, had booked 336 million Swiss francs in revenue from its sale of marketing rights to the 2006 World Cup in Germany â an unusual move for an organization that at the time used accounting methods that recorded income when it was received, not in advance, according to accounting experts.
KPMG noted the move in its audit of the period. Mr. Zen-Ruffinenâs report added that FIFA had destroyed financial documents before 1998, a year before KPMG was hired.
In 2008, a trial in Zug, Switzerland, of former executives of International Sports and Leisure, a FIFA-affiliated marketing firm that had collapsed amid allegations of fraud and theft, fell apart after the groupâs lawyers produced internal documents contending that FIFA was involved.
By 2012, FIFA named Michael J. Garcia, a prominent former federal prosecutor, as the lead investigator of its ethics committee. Mr. Garcia, who extended his inquiry into bidding practices for the 2018 World Cup in Russia and the 2022 World Cup in Qatar, gave FIFA his final report last September but resigned from the role in December after FIFA released a redacted version that Mr. Garcia complained was erroneous and misleading.
And last November, a member of FIFA’s eight-person audit and compliance committee, Canover Watson, was charged in his native Cayman Islands with fraud and money laundering in connection with procurement of a card-swipe system for Cayman’s public hospitals. FIFA’s most recent annual report noted that Mr. Watson had “temporarily left the committee.”
“You’re looking for the tip of the iceberg in an audit,â Mr. Epstein said, adding that in KPMGâs work for FIFA, âthe tip should have gotten the auditorâs attention sometime over the years.”