OSC Enforcement Against KPMG for Audit Failures Related to Bridging Finance Funds

Ontario Securities Commission News

Filed March 31st, 2026

Detected April 1st, 2026

Summary

The Ontario Securities Commission filed an Application for Enforcement Proceeding against KPMG LLP for audit failures relating to its 2019 and 2020 audits of four funds managed by Bridging Finance Inc. The OSC alleges KPMG issued false auditor's reports claiming compliance with generally accepted auditing standards while failing to perform sufficient audit procedures on loan valuations. Bridging Finance entered receivership on April 30, 2021, one month after KPMG's final auditor's reports.

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What changed

The OSC alleges that KPMG failed to perform sufficient and appropriate audit procedures over the most critical aspect of the financial statements – the valuation of loans held within the funds managed by Bridging Finance Inc. Despite issuing independent auditor's reports stating the funds' financial statements presented fairly their financial position and that audits were conducted in accordance with Canadian generally accepted auditing standards, the OSC claims these representations were false. The case will proceed before the Capital Markets Tribunal.

Regulated entities, particularly audit firms and investment fund managers, should review their audit procedures to ensure valuation of critical financial statement elements receives adequate attention. Investors are urged to check the registration status of any persons or company offering investment opportunities. The case management hearing is scheduled for May 5, 2026, at 10:00 am before the Capital Markets Tribunal.

What to do next

Review internal audit procedures for valuation of critical financial statement elements such as loan portfolios
Verify registration status of investment fund managers and auditors through OSC registrant database before investing
Monitor Capital Markets Tribunal proceedings for case updates and potential outcomes

Penalties

Enforcement proceedings may result in disgorgement, administrative monetary penalties, costs orders, and potential suspension or revocation of KPMG's registration to perform audits for OSC registrants.

Source document (simplified)

OSC alleges auditing failures by KPMG in connection with four Bridging Finance Inc. funds

Enforcement Before the Court

March 31, 2026

For Immediate Release

TORONTO – Today, the Ontario Securities Commission (OSC) filed an Application for Enforcement Proceeding against KPMG LLP, for audit failures relating to KPMG’s 2019 and 2020 audits of four funds managed by Bridging Finance Inc.

After completing its audits, KPMG issued independent auditor’s reports directed to fund unitholders stating KPMG’s opinion that the funds’ financial statements presented fairly, in all material respects, their financial position. KPMG represented in those reports that it had conducted its audits in accordance with Canadian generally accepted auditing standards. The OSC alleges that these representations were false.

The OSC alleges that KPMG failed to perform sufficient and appropriate audit procedures over the most critical aspect of the financial statements – the valuation of the loans held within the funds.

On April 30, 2021, one month after the last of KPMG’s auditor’s reports was issued, Bridging Finance Inc. and all its assets were put into receivership by the Ontario Superior Court of Justice.

As gatekeepers, auditors contribute to public confidence in the integrity of financial reporting, a cornerstone of Ontario’s capital markets. Audited financial statements for investment vehicles enhance the credibility of those vehicles, attracting and building trust with investors, and assuring investors that they have a true and fair view of the investment’s financial condition. It is crucial for the integrity of capital markets that audits comply with generally accepted auditing standards.

A case management hearing will be held before the Capital Markets Tribunal on May 5, 2026, at 10:00 am. A copy of the Application for Enforcement Proceeding **** is available on the Capital Markets Tribunal website.

The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices, to foster fair, efficient and competitive capital markets and confidence in the capital markets, to foster capital formation, and to contribute to the stability of the financial system and the reduction of systemic risk. Investors are urged to check the registration of any persons or company offering an investment opportunity and to review the OSC investor materials available at www.osc.ca.

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