Amid Worldwide Cheating Scandals, Big Four Accounting Firms Ordered to Change


Following repeated fines for employees' cheating on CPA exams in both the United States and the United Kingdom, the Big Four accounting firms -- Ernst & Young (EY), Deloitte, Klynveld Peat Marwick Goerdeler (KPMG), and PricewaterhouseCoopers (PwC) -- are facing further scrutiny.
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Financial Times reported on the ongoing situation, noting that the UK accounting watchdog is ordering chief executives of the seven largest auditors -- the Big Four and mid-tier competitors BDO, Grant Thornton, and Mazars -- to thoroughly explain how the intend to stop workers from cheating on exams in the future.

The article continued:

“The FRC is deeply concerned about these events and the potential impact on UK audits if such an issue was identified in the UK,” Sarah Rapson, FRC executive director for supervision, wrote in the letter, a copy of which was seen by the Financial Times.
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Reportedly, supervisors from the regulator are fearful of the "severity and repeating nature" of the infractions, and have already been in talks with executives at major accounting firms to discuss what can be done to minimize the chances of cheating in the future.

The firms have been asked to clearly outline any safeguards already they already have in place to detect cheating on audits or exams, and to explain how these measures can be implemented for tax preparation services, consulting, and more.
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Another recent report regarding the series of troubling incidents noted:

The scandals saw EY last month pay a record $100m (£84M) fine to the US Securities and Exchanges Commission (SEC) over claims dozens of its staff cheated on mandatory ethics exams and later misled the SEC’s investigators.

In February, US and Canadian watchdogs also fined PwC a combined sum of £670,000 over a cheating scandal involving more than 1,200 of its employees.

In September 2021, Australian regulators fined KPMG $450,000 (£257,000) over a similar scandal involving 1,100 of its employees.

At this time, it is not clear what the UK watchdog group's timeline is for new safeguards to be enacted and existing ones to be honed.

What do you think about the Big Four's recent worldwide scandals?

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