Ernst & Young To Pay U.S. $100-M Over Staff's Cheating On Exams
Ernst & Young, one of the Big Four accounting firms, will pay $100 million to resolve US Securities and Exchange Commission (SEC) claims that its auditors cheated on CPA examinations and misled SEC investigators.
Photo Insert: The Wall Street watchdog discovered that 49 EY professionals "obtained or circulated" answer keys to CPA licensure tests, while hundreds more cheated to fulfill Continuing Professional Education (CPE) components relevant to CPA ethics.
The London-based auditor acknowledged the charges and agreed to pay the SEC's largest penalties enforced against an auditor, Katanga Johnson reported for Reuters.
"EY acknowledges the findings determined by the SEC," said Brendan Mullin, EY media relations director, adding that the firm's response has been "thorough, extensive, and effective. At EY, nothing is more important than our integrity and our ethics."
The CPA is the key qualification for accountants in the United States. EY has also agreed to "undertake extensive remedial measures to fix the firm's ethical issues," the SEC said.
The Wall Street watchdog discovered that 49 EY professionals "obtained or circulated" answer keys to CPA licensure tests, while hundreds more cheated to fulfill Continuing Professional Education (CPE) components relevant to CPA ethics.
"This action involves breaches of trust by gatekeepers ... entrusted to audit many of our nation's public companies. It's simply outrageous that the very professionals responsible for catching cheating by clients cheated on ethics exams," Gurbir Grewal, the SEC's enforcement director, said in a statement.
"And it's equally shocking that Ernst & Young hindered our investigation of this misconduct," added Grewal. According to the SEC, EY claimed to have no issues with cheating while in reality, a staff member had alerted the company to possible cheating on a CPA ethics exam.
Furthermore, even after an internal EY inquiry found there had been wrongdoing and after its senior lawyers had spoken with the firm's senior management, EY acknowledged it had not corrected its submission.
The Public Company Accounting Oversight Board (PCAOB) provision requiring EY to uphold integrity when rendering a professional service is also found to have been broken, according to the SEC's ruling.