Audit exam cheating findings spark concern of endemic trend

Exam cheating

When three of the largest global audit firms are fined for widespread exam cheating, it is enough to spark fears the practice has been going on for years and is international in scope.

The enforcement trend most notably began in June 2019, when KPMG was fined $50 million by the U.S. Securities and Exchange Commission (SEC) over cheating allegations that included evidence of auditors sharing internal training exam answers and manipulating test results. In September 2021, KPMG Australia was fined $450,000 by the U.S. Public Company Accounting Oversight Board over allegations of improper answer sharing by employees, while KPMG UK and KPMG Colombia in December were each cited for similar misconduct among firm personnel in being ordered to pay a combined $6 million by the PCAOB.

In February 2022, the PCAOB and the Canadian Public Accountability Board collectively fined PwC $950,000 after more than 1,100 staff in its assurance practice allegedly cheated exams during a four-year period.

In June, the SEC ordered EY to pay $100 million—its highest fine ever imposed against an audit firm—after EY withheld notifying the regulator its auditors had cheated to maintain their professional qualifications over several years.

The ramifications of alleged cheating are serious: underperforming auditors who might ordinarily have lost their licenses to practice have been continuing to audit the world’s largest companies during turbulent economic periods, when the need for assurance on good corporate governance is at its greatest.

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