"It's simply outrageous that the very professionals responsible for catching cheating by clients cheated on ethics exams of all things," Gurbir S. Grewal, director of the SEC's Enforcement Division, said in a release.
According to the Securities and Exchange Commission, Ernst & Young, one of the world's largest accounting firms, has been fined $100 million by federal regulators after admitting that its employees cheated on their ethics exams, per NPR.
According to the SEC, nearly 50 EY audit employees improperly shared answer keys for the CPA exam's ethics section between 2017 and 2021, and hundreds more cheated on continuing professional education courses.
The SEC charged EY with failing to admit to malpractice during the investigation, even though the firm was already aware of cheating allegations.
The $100 million fine is the SEC's largest ever imposed on an audit firm.
KPMG, another Big Four accounting firm, was fined $50 million in 2019 for similar transgressions, but EY's penalty was doubled because it withheld information about the misconduct.
Per the New York Post:
“The SEC said EY has agreed to retain two separate independent consultants as part of its agreement. The consultants will advise on Ernst & Young's ethics policies as well as its past failures to disclose instances of cheating.”
“Auditors need CPA licenses in order to evaluate companies’ financial statements and check for malpractice. Ernst & Young is one of the “big four” auditing firms, alongside Deloitte, PricewaterhouseCoopers and KPMG. In May, reports emerged that Ernst & Young is planning to split its consulting and auditing branches, an enormous shake-up in the accounting world.”
What are your thoughts? Please share in the comments.