The penalty is the largest ever imposed by the Hellenic Capital Market Commission on an audit firm. An administrative decision filed by regulators said Ernst – also known as EY – had misled investigators, withheld evidence and violated public accounting rules aimed at maintaining the integrity of the profession. “It is simply outrageous that the professionals themselves who are responsible for deceiving customers have cheated in the ethics test of all things,” said Gurbir S. Grewal, the commission’s executive director, announcing the settlement on Tuesday. The penalty is double the amount paid by KPMG, another large audit firm, in 2019 to resolve an investigation into similar allegations of cheating by auditors in internal training exams. Ernst, who admitted in turn that her behavior was wrong, said in a statement that “nothing is more important than our integrity and our morals.” The company also said that “the exchange of responses to any assessment or examination is a violation of our Code of Conduct and is not tolerated” and said that efforts would be needed to enforce compliance with the code of conduct. The ethics exams cheated by Ernst auditors were part of a continuing education program offered by most states to accountants to maintain their professional licenses, according to the committee. The SEC said the scam involved hundreds of the company’s auditors from 2017 to 2021. Forty-nine auditors at Ernst received the “answer key” to an ethics examination that is part of the initial process to become chartered accountants, according to the SEC’s administrative mandate. Regulators say this is not the first time that Ernst employees have been widely cheated on ethics. The SEC said that a somewhat similar fraud scandal, which the company handled internally, took place from 2012 to 2015. The SEC, in its mandate, noted that Ernst had previously sent warnings to officials that they had not failed the exams, but had not implemented adequate controls until recently. As part of the settlement, the SEC asked Ernst to hire two independent consultants. One will review the company’s ethics policies and the other will review its failure to properly detect fraud. Mr Greval said the settlement “should serve as a clear signal that the SEC will not tolerate integrity failures by independent auditors”.
