Big Five accounting firm


was censured by the

Securities and Exchange Commission

for acting as independent auditor of a mutual fund in which it had an investment.

The SEC found that from May to December 2000, a KPMG investment made up as much as 15% of the net assets in an AIM money-market fund called Short-Term Investment Trust. During that period KPMG also acted as the fund's independent accountant. On Nov. 9 the fund included KPMG's audit report in 16 filings it made with the SEC.

TST Recommends

KPMG consented to the administrative order without admitting or denying guilt.

In addition to the censure, the commission ordered KPMG to establish or shore up various procedures that it said should've prevented the violation. It found that KPMG lacked procedures in which potential investments were cross-checked against a "restricted entities list," as well as rules requiring a KPMG partner to be involved in choosing money market investments.

"This case illustrates the dangers that flow from a failure to implement adequate policies and procedures designed to detect and prevent auditor independence violations," said Paul R. Berger, associate director of enforcement at the SEC.

The censure comes at a time of increased regulatory scrutiny of accountants in the wake of the collapse of energy trader



. Congress is currently looking into the procedures of accountant Arthur Andersen following revelations that the company's employees destroyed documents related to their audit of Enron.