Ernst & Young pays $100m to settle US charges of cheating by audit staff
Ernst & Young, one of the world’s largest accounting firms, agreed to pay a record $100m to US regulators on Tuesday amid charges that dozens of its audit staff cheated on an ethics exam and misled investigators.
The Securities and Exchange Commission (SEC) charged that “over multiple years” EY’s audit professionals cheated on exams required to obtain and maintain Certified Public Accountant (CPA) licenses, and withheld evidence of this misconduct from the SEC’s enforcement division during an investigation of the matter.
“This action involves breaches of trust by gatekeepers within the gatekeeper entrusted to audit many of our nation’s public companies,” said the SEC enforcement director, Gurbir Grewal.
“It’s simply outrageous that the very professionals responsible for catching cheating by clients cheated on ethics exams of all things. And it’s equally shocking that Ernst & Young hindered our investigation of this misconduct,” he said.
The investigation is ongoing and SEC officials said that they could bring charges against individuals.
According to the SEC’s investigation between 2017 and 2019, 49 EY audit professionals cheated on exams by using answer keys and sharing them with their colleagues. In addition, “hundreds of other audit professionals” cheated on courses, including those addressing ethical obligations.
“And a significant number of EY professionals who did not cheat themselves, but knew their colleagues were cheating and facilitating cheating, violated the firm’s code of conduct by failing to report this misconduct,” according to the SEC.
According to the SEC, EY was aware of a similar wave of cheating on ethics exams among staff between 2012 and 2015. Those issues were dealt with internally but the SEC said EY
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