Hundreds of auditors at the accounting giant Ernst & Young cheated on an ethics test they had to take to obtain or maintain their professional licenses, and the company withheld evidence of the misconduct from federal authorities investigating the matter, according to the Securities and Exchange Commission. In response, the SEC fined the company $ 100 million, the largest ever in an audit firm, the agency said Tuesday. “This action violates the trust of the janitors within the janitor who has been assigned to control many of our nation’s public companies,” SEC enforcement director Gurbir Grewal said in a statement. “It is simply outrageous that the professionals themselves who are responsible for cheating on customers have cheated on ethics tests for all things.” In a statement, Ernst & Young admitted the SEC’s allegations and said it was complying with the agency’s sentence. “We have repeatedly and consistently taken steps to enhance our culture of compliance, ethics and integrity in the past,” company spokeswoman Suzanne Bouhia said in an email. “We will continue to take extensive action, including disciplinary action, training, monitoring and communications, to further strengthen our commitment in the future.” The agency found that since 2017, 49 Ernst & Young professionals have shared or received answers to ethics exams they had to pass in order to be licensed as chartered accountants. Hundreds of others cheated on courses they had to attend to retain their seats on state supervisory boards, while others who did not attend helped facilitate the conduct, the SEC said. The company’s leaders then covered the activity, failing to report it to the SEC after the agency asked Ernst & Young about the complaints it had received and the company launched an internal investigation that confirmed the misconduct, according to the SEC. The record fine – double the $ 50 million paid by rival KPMG in service in 2019 for its own fraud scandal – partly reflects the seriousness of the company’s decision not to cooperate with the investigation, an SEC official told reporters. Grewal, in a statement, said: “It is equally shocking that Ernst & Young has blocked our investigation into this offense. This action should serve as a clear message that the Hellenic Capital Market Commission will not tolerate integrity failures by independent auditors who choose the easiest mistake from the hardest right “. In addition to the fine, the SEC is forcing Ernst & Young to hire two independent advisers, one to review the company’s ethics and integrity policies and the other to investigate its failure to disclose its own findings. The episode is not the first time Ernst & Young auditors have been caught cheating. From 2012 to 2015, an internal company investigation found that more than 200 employees of the company exploited a software bug on the company’s testing platform to cheat on exams, the SEC said. At that time, the company took disciplinary action against these employees and warned its workforce not to make such cuts. “Our response to this unacceptable behavior of the past has been comprehensive, extensive and effective,” Buchia said. He said the new requirements imposed by the SEC on the company “will reinforce the steps we have already taken in the years since these situations occurred”. Ernst & Young is the third largest accounting firm in the world and reported global revenue of $ 40 billion in the last financial year, which ended in June 2021.
