Ernst & Young hit with $100 million fine after auditors cheat on ethics exam

According to the Securities and Exchange Commission, Ernst & Young cheated the ethics section of the Certified Public Accountant exam and withheld evidence of regulators ’behavior.

The SEC has fined EY $ 100 million, the largest sanction ever for an accounting firm, the agency announced Tuesday. Beyond breaking accounting rules, the company “obstructed” the agency’s investigation into misconduct by withholding information from the SEC, the regulator said.

“It’s just outrageous that the very professionals responsible for engaging customers are cheating on ethics exams,” Gurbir Grewal, director of the SEC’s enforcement division, said in a statement. “It is equally shocking that Ernst & Young has hindered our investigation of this misconduct.”

After being informed of the potentially false conduct, EY “indicated that the company had no current problems with the deception,” and never reported the agency when an internal investigation found evidence of this, according to the SEC. .

Nearly 50 EY audit employees shared answers about the ethical part of the CPA exam between 2017 and 2021, with hundreds more cheating on continuing education courses, the SEC said. A significant number of EY professionals who did not cheat but knew that their colleagues did, and facilitated the deception, also violated the company’s code of conduct by not reporting it. .

EY said it was complying with the liquidation order and would take additional action to increase compliance.

“We are confident that the results of the commitments will reinforce the steps we have already taken in the years since these situations occurred,” EY said in a statement. Sharing answers about any assessment or exam is a violation of our Code of Conduct and is not tolerated by EY. Our response to this unacceptable past behavior has been comprehensive, comprehensive and effective. “

The SEC in 2019 fined another of the “big four” accounting firms, KPMG, $ 50 million to cheat in internal training tests and change previous audit work after obtaining information stolen from an industry control group.