Global financial services firm KPMG has paid $8.2 million to settle a US finance industry watchdog’s allegations that it broke rules designed to keep auditors from getting too close to their clients.

Now the Securities and Exchange Commission (SEC) has issued a separate warning to each of the ‘Big Four’ audit firms — Deloitte, PwC, EY and KPMG — that they are not allowed to second staff to their audit clients if the result is their staff act as employees.

Bermuda’s accountancy rule book, issued by the Institute of Chartered Accountants of Bermuda, runs to more than 40 pages — and contains sections which ban activity which could call into question the independence of auditors.

KPMG Bermuda did not respond by press time to requests for comment on the US case.

The SEC, according to the Wall Street Journal, said that the US arm of KPMG has provided other services like bookkeeping and payroll to affiliates of two of its audit clients and that the firm had hired a recently-retired senior tax counsel of another audit client’s affiliate and then loaned him back to his original firm to do the same work.

KPMG staff were also said to have owned shares in one client and in affiliates of another. The allegations spanned 2007 to 2011 and the SEC said they violated “auditor independence” rules.

KPMG made the payment without admitting any wrongdoing. The US arm said in a statement that it was “fully committed to ensuring our independence with respect to all our audit clients” and that it had changed company rules to ensure it complies with US regulations.

The Big Four firms in recent years have been providing more consulting and non-audit services, with much of their expansion coming from consulting rather than core auditing services.

And that has worried US watchdogs, even though income from consulting has come from companies that are not audit clients of the Big Four.

The US Public Company Accounting Oversight Board (PCAOB), the country’s audit industry regulator, is also to examine consulting practices among the major financial services firms.

PCAOB chairman James Dory said: “Independence is the cornerstone of the auditing process.”