Ernst & Young admitted that dozens of employees in its audit unit cheated on the ethics portion of the Certified Public Accountant (CPA) exam and that the firm misled US regulators investigating the misconductaccording to the Securities and Exchange Commission (SEC).
The SEC announced on Tuesday that EY will pay a $100 million fine, the highest penalty ever imposed on an auditing firm. In addition to violating accounting rules, EY failed to cooperate with a key part of the regulator’s investigation, the agency said.
Nearly 50 EY audit employees shared answers to the ethics portion of the CPA exam between 2017 and 2021 and hundreds more cheated in continuing professional education courses, the SEC said.
EY said in a statement that it is complying with the SEC’s order and will take additional steps to improve compliance.
“We are confident that the results of the engagements will reinforce the steps we have already taken in the years since these situations occurred,” the firm said. “Sharing the answers to any assessment or exam is a violation of our Code of Conduct and is not tolerated at EY. Our response to this unacceptable past behavior has been comprehensive, extensive and effective.”
Despite being informed of possible dishonest behavior, the company told the agency that it had no problem with cheating, according to the SEC. The auditor then failed to promptly correct those statements when he later launched an internal investigation..
Many EY employees knew their behavior violated the company’s code of conduct, but some did it because they couldn’t do it on their own, according to the SEC. The firm ultimately disciplined and, in some cases, fired people for their actions, according to the SEC, which said the investigation is ongoing.
“It’s just outrageous that the same professionals responsible for detecting client cheating cheated on ethics tests,” said Gurbir Grewal, chief of the SEC’s enforcement division., in the statement. “It is equally shocking that Ernst & Young hindered our investigation of this misconduct.”