Historic EY fine latest by-product of KPMG cheating scandal
It is impossible to ignore the Securities and Exchange Commission’s (SEC) record $100 million fine against EY for employee exam cheating is exactly double the amount the regulator penalized fellow Big Four firm KPMG in 2019 for its infamous cheating scandal. Especially since the latter served as a catalyst for the former.
It was two days after the SEC fined KPMG $50 million for stealing inspection information from the Public Company Accounting Oversight Board (PCAOB) in addition to internal exam cheating by its employees that the agency sent EY a voluntary request asking whether the firm was aware of any cheating by its workers. The request carried a 24-hour response deadline, which EY met when it disclosed five historic matters of misconduct regarding training programs and assessments.
Not among those disclosures was an internal whistleblower complaint lodged at EY on June 19—the same day the SEC sent its voluntary request—regarding cheating on a certified public accountant (CPA) ethics exam. By the time EY’s senior attorneys learned of the tip June 21, they had already signed off on the firm’s submission to the SEC a day earlier that no ongoing cheating was taking place. The firm’s handling of the matter from that point would be what earned it the largest fine the SEC has ever imposed against an audit firm.