Big Four: US fines Deloitte, PwC and EY over exam cheating
The US accountancy regulator has fined the Dutch arms of Big Four firms Deloitte, PwC, and EY $8.5m (£6.2m) over ‘widespread exam misconduct’.
The Public Company Accounting Oversight Board (PCAOB) has sanctioned Deloitte Netherlands, PwC Netherlands, and EY Netherlands for violating its rules and quality control standards related to the firms’ internal training programs and monitoring of their systems of quality control.
The regulator found that, over five years, all three firms failed to “adequately prevent” or “detect extensive improper answer sharing” on their mandatory tests for their internal training programme.
Between 2018 and 2022, hundreds of professionals, including partners, were found to have engaged in improper sharing of answers to mandatory tests.
This misconduct extended up to the level of senior leaders at Deloitte Netherlands and PwC Netherlands.
As a result, each of the three firms consented to PCAOB’s orders against them without admitting or denying the findings.
Deloitte, PwC and EY penalties
Deloitte Netherlands and PwC Netherlands each agreed to pay a $3m civil monetary penalty, and EY Netherlands agreed to pay a $2.5m civil monetary penalty.
Each of the three firms was censured by the PCAOB and agreed to review and improve their quality control policies and procedures. They have agreed to work towards reasonable assurance their respective personnel act with integrity in connection with internal training and to report their compliance to the regulator.
The three firms also received credit for their cooperation during their investigations.
Commenting on the fines, Robert Rice, Director of the PCAOB’s division of enforcement and investigations, said: “Our investigations of these three firms revealed that their quality control systems failed to evaluate appropriately and monitor the risk of improper answer sharing among their personnel, including after the firms learned of extensive answer sharing in at least one other major audit firm.”
While PCAOB Chair Erica Williams added, “The PCAOB will not allow impaired ethics to threaten the integrity of our capital markets.”
This news on three of the Big Four firms comes after the PCAOB fined the Dutch arm of KPMG and its former head of assurance $25m last April for a similar issue of exam cheating.