Accounting giant Ernst & Young will pay $ 100 million to settle charges with the Securities and Exchange Commission that hundreds of its employees cheated on the ethics components of continuing education and certified public accounting exam courses and to withhold information about misconduct from regulators.
“It’s simply outrageous that the very professionals responsible for engaging customers are cheating in the ethics exams of all things,” Gurbir Grewal, the SEC’s head of enforcement, said in a press release. “And it’s equally shocking that Ernst & Young is hindering our investigation of this misconduct.”
The SEC’s order states that between 2017 and 2019, 49 company audit professionals sent or received response keys to CPA ethics exams, while hundreds more cheated on professional training courses. continued required by state accounting boards for accountants to maintain their licenses.
The $ 100 million fine is double that charged to competitor KPMG in 2019 for similar infractions, and the severity of the fine against Ernst & Young is due in part to its obstruction of regulators ’investigation, according to senior SEC officials.
Ernst & Young admitted that during the SEC investigation, the company tricked the regulator by refusing to share information about possible scams in the CPA exam that had been shared with it.
“EY also admits that he did not correct his presentation even after initiating an internal investigation to deceive the ethics of CPA and other exams and confirmed that there had been cheating, and even after his lawyers seniors would discuss the matter with members of the firm’s senior management, ”the SEC said in a press release.
In addition to the monetary sanction, the SEC order requires the company to hire two independent independent consultants to review its ethics and integrity-related policies and procedures and to review the fact that the company has not disclosed misconduct during regulatory investigation.
Fines occur when major global accounting firms reexamine their business models, with Ernst and Young and a competitor, Deloitte, considering turning their consulting businesses into separate entities.
The Wall Street Journal reported in March that the SEC is investigating the industry to understand how accounting and consulting guns conglomerates manage conflicts of interest between these lines of business.