Accounting giant Ernst & Young will pay $ 100 million to settle allegations with the Securities and Exchange Commission that hundreds of its employees have cheated on the ethical components of the Certified Public Accountant exam and continuing education courses and to conceal information about wrongdoing. behavior of regulators.
“It’s just outrageous that the professionals responsible for catching customer fraud themselves are cheating on ethics exams for all things,” Gurbir Greval, SEC’s law enforcement chief, said in a press release. “And just as shocking, Ernst and Young obstructed our investigation into this misconduct.”
The SEC order states that between 2017 and 2019, 49 auditors at the firm sent or received keys to answer CPA ethics exams, while hundreds more cheated on continuing vocational training courses required by state accounting councils. for accountants to maintain their licenses.
The $ 100 million fine is twice as high as that imposed on rival KPMG in 2019 for such violations, and the severity of the fine against Ernst & Young is due in part to obstructing the regulators’ investigation, according to senior SEC officials.
Ernst & Young admitted that during the SEC investigation, the company misled the regulator by refusing to share information about a potential fraud in the CPA exam that was shared with it.
“EY also acknowledges that it did not correct its submission even after initiating an internal investigation into fraud in the ethics of the CPA and other examinations and confirmed that there was fraud, and even after its senior lawyers discussed the matter with members of the CPA. the company’s top management, “the SEC said in a statement.
In addition to the fine, the SEC order requires the company to hire two separate independent consultants to review its ethics and integrity policies and procedures and to review the company’s failure to disclose misconduct during the regulatory investigation.
The fines are coming as major global accounting firms review their business models, with Ernst and Young and rival Deloitte reportedly considering splitting their consulting firms into separate units.
The Wall Street Journal reported in March that the SEC was researching the industry to find out how conglomerates with accounting and consulting weapons manage conflicts of interest between these business lines.
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