EY was fined a record $100 million (£81.6 million) after dozens of its employees cheated on an ethics exam.

Ernst & Young was Fined a Record Amount $100m for Cheating on Ethics Exams.

EY was fined a record $100 million (£81.6 million) after dozens of its employees cheated on an ethics exam.

The penalty was imposed after the Big Four accountant admitted that nearly 50 of its auditors cheated on the ethics portion of the Certified Public Accountant (CPA) exam. The firm’s executives then misled US regulators about the misconduct, obstructing their investigation.

The fine is the largest ever levied by the US Securities and Exchange Commission against an accounting firm, more than doubling the penalty levied against KPMG in 2019 for exam cheating and illegal tip-offs.

EY was fined a record $100 million (£81.6 million) after dozens of its employees cheated on an ethics exam.

“It’s simply outrageous that the very professionals are responsible for catching clients cheating cheated on ethics exams,” said Gurbir Grewal, director of the SEC’s enforcement division.

“It’s also shocking that Ernst & Young obstructed our investigation into this misconduct… This action involves breaches of trust by gatekeepers within the gatekeepers entrusted with auditing many of our country’s publicly traded companies.”

Between 2017 and 2021, nearly 50 EY auditors improperly shared answers to the ethics portion of the CPA exam, and hundreds more cheated on continuing professional education courses, according to the SEC.

Passing the CPA ethics exam is required to become a certified accountant in the United States. It consists of 40 multiple-choice questions about how to maintain integrity and objectivity, as well as what actions could discredit an accountant or cause them to lose their license.

EY must hire two separate consultants to examine its ethics policies and another to review disclosure failures in addition to the record fine.

The SEC’s investigation is still ongoing, and individual auditors may face sanctions.

The fine is the latest setback for the Big Four accounting and consulting firms, EY, KPMG, Deloitte, and PwC. In the United Kingdom, EY is being sued for at least $2.5 billion for alleged negligence in its audits of NMC Health, a former FTSE 100 hospital group that collapsed amid allegations of fraud.

EY’s spokesman stated that the firm complies with the SEC’s requirements, adding, “In the past, we have repeatedly and consistently taken steps to reinforce our culture of compliance, ethics, and integrity.” We will continue to take extensive measures, such as disciplinary actions, training, monitoring, and communications, to strengthen our commitment in the future.

“This action should serve as a clear message that the SEC will not tolerate integrity failures by independent auditors who choose the easier wrong over the harder right,” said Mr. Grewal of the SEC.

 

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