CNN – Ernst & Young was hit with a record $100 million fine by the US government after regulators discovered the company knew some of its auditors had been cheating on exams for several years and did nothing about it. ‘Stop.
The Securities and Exchange Commission said Tuesday that a “significant number” of the accounting firm’s auditors cheated on the ethics portion of the CPA test and other courses required to maintain licenses. Perhaps even more surprisingly, the SEC said Ernst & Young “argued” that it had “no current cheating issues when, in fact, the firm had been made aware of a potential cheating during a CPA ethics review”.
The $100 million fine is the largest ever imposed on an audit firm.
“This action involves breaches of trust by gatekeepers within the gatekeeper responsible for auditing many of our nation’s public companies,” Gurbir Grewal, director of the SEC’s enforcement division, said in a press release. . “It is simply outrageous that the very professionals tasked with catching cheating by clients have cheated on ethics reviews of all things.”
He added that it is “equally shocking” that has hampered his investigation. “This action should serve as a clear message that the SEC will not tolerate breaches of integrity by independent auditors who choose the easier wrong over the harder right,” Grewal said.
In addition to the fine, the SEC ordered Ernst & Young to retain the services of two independent consultants to “help it address its shortcomings,” a firm reviewing the company’s procedures for ethics and another his failures to disclose.
Ernst & Young said in a statement that “nothing is more important than our integrity and ethics” and that it is complying with the SEC order.
“We have repeatedly and consistently taken steps to strengthen our culture of compliance, ethics and integrity in the past,” a company spokesperson said. “We will continue to take far-reaching measures, including disciplinary action, training, monitoring and communications that will further strengthen our commitment in the future.”
The fine is double what KPMG was ordered to pay in 2019 for similar allegations of cheating.
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