Big Four accounting firm Ernst & Young will pay $100 million to settle charges laid by the Securities and Exchange Commission (SEC) addressing systematic cheating among its accounting professionals on certified public accountant (CPA) license exams over four years.

EY admitted it withheld information about its own whistleblower reports and an internal investigation into the employee cheating, hindering the SEC’s investigation into the misconduct.

The $100 million fine is the largest the agency has ever imposed against an audit firm.

“This action involves breaches of trust by gatekeepers within the gatekeeper entrusted to audit many of our nation’s public companies. It’s simply outrageous that the very professionals responsible for catching cheating by clients cheated on ethics exams of all things,” Gurbir Grewal, director of the SEC’s Enforcement Division, said Tuesday in a press release. “And it’s equally shocking that Ernst & Young hindered our investigation of this misconduct. This action should serve as a clear message that the SEC will not tolerate integrity failures by independent auditors who choose the easier wrong over the harder right.”

By allowing the cheating to continue and for hindering the SEC’s investigation into the scandal, EY violated a Public Company Accounting Oversight Board (PCAOB) rule requiring the firm to maintain integrity in the performance of a professional service; committed acts discreditable to the accounting profession; and failed to maintain an appropriate system of quality control, the SEC stated.

In a statement, EY said it “acknowledges the findings determined by the SEC and is complying with the requirements of the order.”

From 2017-21, 49 EY accounting professionals cheated on state ethics examinations administered by state accountancy boards, according to the SEC’s order. The exams are a portion of the requirements necessary for accounting professionals to remain CPAs in the states where they work. The cheating occurred when EY employees used answer keys to help them pass the exams and shared those answer keys with their colleagues.

“Hundreds” of other EY professionals cheated on continuing profession education (CPE) courses, “including those addressing CPAs’ ethical obligations,” the SEC added.

Though EY continually warned its employees not to cheat on exams and about the disciplinary actions the firm would face if the cheating was discovered, “it did not implement any additional controls to detect this misconduct during the relevant period,” the order said.

In addition, a “significant number of EY professionals who did not cheat themselves, but knew their colleagues were cheating and facilitating cheating, violated the firm’s code of conduct by failing to report this misconduct,” the SEC said.

EY hindered the agency’s investigation into the cheating scandal by failing to turn over internal whistleblower reports regarding individual instances of cheating, as well as the firm’s own investigation into the misconduct.

The SEC sent a formal request to EY in June 2019, seeking information “about complaints the firm had received regarding cheating on training exams.” On the same day, EY received a whistleblower tip that one of its audit professionals shared an answer key with a colleague. But the firm told the SEC it did not have any current issues with cheating and never updated its disclosure to the agency regarding the state of cheating within the firm.

EY conducted an internal investigation that confirmed there had been cheating but never shared the results of that investigation with the SEC.

Beyond paying the fine, EY will hire two separate consultants to remediate deficiencies in its ethics policies and procedures. “One consultant will review the firm’s policies and procedures relating to ethics and integrity. The other will review EY’s conduct regarding its disclosure failures, including whether any EY employees contributed to the firm’s failure to correct its misleading submission,” the SEC said in its press release.

EY will also conduct its own examination into its “quality controls, policies, and procedures” regarding ethics and integrity; respond to information requests from the SEC and other government agencies; and submit a report to the SEC within 120 days of the order.

This is not the first cheating scandal at EY.

“From 2012 to 2015, over 200 EY audit professionals across the country exploited a software flaw in EY’s CPE testing platform to pass exams while answering only a low percentage of questions correctly,” the SEC noted. “Following EY’s discovery of that earlier cheating scheme, the firm took disciplinary actions and repeatedly warned its audit professionals not to cheat on exams. Still, the cheating continued.”

Fellow Big Four accounting firm KPMG paid a $50 million fine to the SEC in 2019 to settle charges regarding its infamous PCAOB cheating scandal in addition to its auditors cheating by sharing internal training exam answers and manipulating test results. Earlier this year, the Canadian affiliate of PwC agreed to pay $950,000 in penalties between two audit regulators after discovering widespread cheating among employees taking internal exams.

In an emailed statement, EY said, “We have repeatedly and consistently taken steps to reinforce our culture of compliance, ethics, and integrity in the past. We will continue to take extensive actions, including disciplinary steps, training, monitoring, and communications, that will further strengthen our commitment in the future. We are confident that the outcomes of the undertakings will reinforce steps we have already taken in the years since these situations occurred.”