The Canadian affiliate of Big Four audit firm PwC has agreed to pay $950,000 in penalties between two audit regulators after discovering widespread cheating among employees taking internal exams.
PwC Canada was fined $750,000 and censured by the Public Company Accounting Oversight Board (PCAOB) in the United States in addition to being fined $200,000 and censured by the Canadian Public Accountability Board (CPAB). Both regulators in orders published Friday credited PwC Canada for its cooperation in their investigations, including self-reporting the alleged violations.
The details: From at least 2016 until early 2020, PwC Canada’s quality controls failed to identify more than 1,200 firm professionals were involved in improper answer sharing during online internal training exams regarding auditing, accounting, and professional independence, according to the PCAOB’s order. More than 1,100 of the employees were from the firm’s assurance practice and were primarily junior level.
Though PwC Canada had quality controls in place addressing integrity, “[n]one of those policies and procedures … were designed to provide reasonable assurance that firm personnel acted with integrity when taking internal training tests,” the PCAOB stated. PwC Canada’s monitoring procedures were limited to tracking completion of courses and related tests and were not designed to detect answer sharing.
Employees allegedly shared answers through shared drives on the firm’s computer network, via email, and through discussion while taking tests. “The shared drives contained answers for at least 46 of the firm’s approximately 55 mandatory assurance tests, as well as answers for some mandatory firm-wide tests containing content concerning professional integrity and professional independence,” according to the PCAOB.
The CPAB’s order contained similar allegations. PwC Canada neither admitted nor denied the PCAOB and CPAB’s findings in reaching settlement.
PwC Canada response: Nicolas Marcoux, chief executive of PwC Canada, said in a statement the firm identified the widespread cheating in early 2020. The firm “immediately opened an extensive investigation with the assistance of external resources and voluntarily disclosed this matter to the regulators,” Marcoux said.
“We have since undertaken several remediation steps including retraining, additional ethics training, financial penalties, written warnings, and terminations where warranted,” Marcoux added.
PwC Canada is “confident” the exam cheating did not compromise the quality of its audits, according to Marcoux.