EY US agrees record €95m US settlement over ethics exam cheating

28/06/2022 18:17:00

EY US agrees record €95m US settlement over ethics exam cheating via @IrishTimesBiz

EY US agrees record €95m US settlement over ethics exam cheating via IrishTimesBiz

SEC alleges ‘breaches of trust’ involving dozens of employees at Big Four audit firm

Expand EY is a multinational accounting firm headquartered in London, England By Stefania Palma and Michael O’Dwyer Tue Jun 28 2022 - 16:14 Big Four auditing firm EY has agreed to a record $100 million (€95 million) settlement with the US securities regulator to resolve claims that dozens of its employees cheated on an ethics exam and that it misled investigators.The London-based auditor admitted to the charges, the regulator said, and agreed to pay what the SEC said is its largest fine against an auditor.A delighted Pádraig Harrington holding the US Senior Cup.Padraig Harrington (file pic).

The fine is the highest ever imposed by the US Securities and Exchange Commission on an auditor, twice the penalty paid by KPMG in 2019 for exam cheating and illegal tip-offs.“This action involves breaches of trust by gatekeepers within the gatekeeper entrusted to audit many of our nation’s public companies,” said Gurbir Grewal, director of the SEC’s enforcement division, in a statement.EY has also agreed to"undertake extensive remedial measures to fix the firms ethical issues," the SEC said.“It’s simply outrageous that the very professionals responsible for catching cheating by clients cheated on ethics exams of all things.The three-time major winner started the final day at Saucon Valley Country Club’s Old Course five shots ahead and went on to card a one-over par 72.” The investigation is continuing, and an SEC official said the regulator could also bring cases against individuals."This action involves breaches of trust by gatekeepers entrusted to audit many of our nation's public companies," Gurbir Grewal, the SEC's enforcement director, said in a statement.Between 2017 and 2021, 49 EY staff sent or received answer keys to the ethics portion of the Certified Public Accountant exam, with hundreds more cheating on tests required to maintain the certification, according to the SEC order.More to follow… Advertisement PADDY HUGE Clutch 🐦 for @padraig_h on 15 to push his lead back to 2.

A “significant” number of employees also failed to report the violations, the agency said."And it's equally shocking that Ernst & Young hindered our investigation of this misconduct," added Grewal.“I think that adds more than if you could turn around and win a different senior major.EY acknowledged the SEC’s findings and said it was complying with the order.Its response to “this unacceptable past behaviour has been thorough, extensive, and effective”, the auditor said, adding that it would continue taking steps including disciplinary action and training to “strengthen” commitments to “compliance, ethics, and integrity”.It added that EY admitted it did not correct its submission even after an internal EY investigation confirmed there had been cheating, and even after its senior lawyers discussed the matter with the firm's senior management.The unprecedented penalty comes as EY weighs plans to split its audit and advisory practices globally, a move that would liberate consultants from liability for future regulatory fines and legal awards for misconduct or negligence by the firm’s auditors.” As well as becoming the first player from the Republic to hoist the Francis D Ouimet Memorial Trophy aloft, Harrington joined Arnold Palmer, Gary Player, Lee Trevino and Jack Nicklaus as the only multiple victors in The Open to also win the US Senior Open.The fine was announced during a week of upheaval at EY.The SEC has ordered EY to retain two independent consultants to help remediate its deficiencies.

US boss Kelly Grier, who quit the company after a power struggle with its global chief Carmine Di Sibio, is due to step down on Thursday.She will be replaced by Julie Boland, who won a partner election in February.The other will review EY’s conduct regarding its disclosure failures, including whether any EY employees contributed to the firm’s failure to correct its misleading submission, the SEC said.Shortly after the KPMG case in 2019, EY formally denied any issues with its own employees cheating on exams, according to the SEC order.On the previous day, however, EY received a tip that an employee had shared answers to a CPA ethics exam, but it did not modify its SEC submission even after launching an internal investigation, confirming instances of cheating and discussing the matter among senior management and lawyers.EY said nothing to the SEC or the Public Company Accounting Oversight Board for almost nine months, according to an SEC official, which was a contributing factor to the regulator’s decision to seek a record penalty.

According to the SEC order, 91 EY employees requested, used or shared answers with colleagues after the US chair and managing partner sent a note to US staff in 2019 warning against cheating in light of the KPMG case.It is “shocking that Ernst & Young hindered our investigation of this misconduct,” Grewal said.“This action should serve as a clear message that the SEC will not tolerate integrity failures by independent auditors who choose the easier wrong over the harder right.” In addition to the fine, the SEC will install two independent consultants at EY.One will review policy on ethics and integrity, while the other will have access to privileged information that has not been available to the SEC, as well as powers to enforce employment actions and other remedies, as they probe EY’s submissions to regulators.

The order handed down on Tuesday is EY’s latest regulatory run-in.The SEC has filed five cases against the auditor since 2014.It is also the latest in a series of fines levied against Big Four firms for cheating on exams or in SEC audit inspections.Earlier this year, KPMG’s former US head of audit was fined $100,000 and censured by the country’s accounting watchdog for failing to supervise colleagues who received advance warning on audits the regulator planned to scrutinise.– Copyright The Financial Times Limited 2022.

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EY to pay $100m to settle US charges of exam cheatingAccounting firm Ernst & Young will pay $100m to settle US Securities and Exchange Commission (SEC) charges that its auditors cheated on certified public accounting (CPA) exams and that it misled the agency's investigators.

'Something I never had in my career' - Harrington hails special US Senior Cup victoryThe Dubliner held off Steve Stricker to claim a one-shot victory.

Padraig Harrington wins US Senior OpenThe Dubliner triumphed by one shot at Saucon Valley.