The UK’s accounting watchdog has called on the country’s major audit firms to put measures in place to prevent employees from cheating on exams.
Following a series of high-profile cheating scandals in Canada, Australia and the US, the UK’s Financial Reporting Council (FRC) has told British auditors to set out their plans to prevent similar such scandals from happening in the UK.
In a letter to the heads of the UK’s “Tier 1” auditors, Sarah Rapton, executive director of supervision at the FRC, said: “I am asking you to formally set out the preventative and detective controls in place at your firm to ensure that such incidents do not happen in the UK and how you obtain assurance as to the controls’ effectiveness.”
The letter comes after PwC, EY, and KPMG this year faced fines over claims they failed to prevent widespread cheating on the mandatory accountancy exams trainees must pass to qualify as accountants.
The scandals saw EY last month pay a record $100m (£84M) fine to the US Securities and Exchanges Commission (SEC) over claims dozens of its staff cheated on mandatory ethics exams and later misled the SEC’s investigators.
In February, US and Canadian watchdogs also fined PwC a combined sum of £670,000 over a cheating scandal involving more than 1,200 of its employees.
In September 2021, Australian regulators fined KPMG $450,000 (£257,000) over a similar scandal involving 1,100 of its employees.
The letter calls on the top audit firms to “confirm the specific controls that are in place… to ensure the integrity of the examinations as part of obtaining the chartered accountant qualification”.
The term “Tier 1” covers the UK’s seven largest audit firms, including the Big Four – EY, PwC, Deloitte, and KPMG – alongside BDO, Tilney Smith & Williamson, and Grant Thornton.