The accounting giant Ernst & Young LLP (EY) was fined $100 million Tuesday by the U.S. Securities and Exchange Commission (SEC) to settle charges that its audit professionals cheated on the exams required to obtain and maintain Certified Public Accountant (CPA) licenses.
EY was also charged with withholding evidence of this misconduct from the SEC’s Enforcement Division during the investigation into the matter.
What Happened: According to a statement from the SEC, EY acknowledged that “a significant number” of its auditors cheated on the ethics component of CPA exams and various continuing professional education courses required to maintain CPA licenses over multiple years.
The SEC also noted that EY “made a submission conveying to the Division that EY did not have current issues with cheating when, in fact, the firm had been informed of potential cheating on a CPA ethics exam,” adding that the company made no effort to correct its submission even after an internal probe confirmed that cheating was taking place.
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What Else Happened: In addition to its fine, EY will be required retain two separate independent consultants — one to review the firm’s policies and procedures relating to ethics and integrity, and another to review EY’s conduct regarding its disclosure failures.
“The SEC will not permit the submission of misleading information or any action that delays or frustrates our mandate to protect investors and our markets,” said Melissa R. Hodgman, associate director of the SEC’s Enforcement Division.
“Ernst & Young faces significant sanctions and extensive remediation to ensure that its culture and conduct meet the ethical standards required of those responsible for the integrity of our capital markets.
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