Auditor KPMG either initiated accounting fraud at New Century Financial or stood idly by as the failed subprime mortgage lender committed fraud in 2005 and 2006, an independent report requested by the US Department of Justice shows.

Once the second-largest US subprime lender, New Century filed for Chapter 11 bankruptcy protection last April 2, and was one of the first major casualties of the current US housing crisis, which has roiled global financial markets. It had been one of the largest US providers of home loans to people with poor credit.