ErErErn Young to be paid $100 million for cheating on exam

Accounting giant Ernst Young will be paid $100 million for a lawsuit against the Securities and Exchange Commission alleging that hundreds of its employees cheated on the ethics components of the Certified Public Accountant examination and continuing education courses and withholding information about misconduct to regulators.

It is absolutely outrageous that the very professionals responsible for catching cheating by clients cheated on ethics exams of all things, Gurbir Grewal, the SEC's enforcement chief, said in a press release. It is also shocking that Ernst Young has obstructed our investigation of this misconduct. Between 2017 and 2019 49 audit professionals at the firm sent or received answer keys to the CPA ethics exams, while hundreds more were cheated on continuing professional education required by state accountancy boards for accountants to keep their licenses, according to the SEC s order.

The $100 million fine was twice that levied against rival KPMG in 2019 for similar violations. The severity of the fine against Ernst Young is due in part to its obstruction of regulators investigation, according to senior SEC officials.

Ernst Young admitted during the SEC investigation that the company misled the regulator by refusing to share information about potential cheating on the CPA exam that had been shared with it.

EY admitted in a press release that it did not correct its submission, even after it launched an internal investigation into cheating on CPA ethics and other exams and confirmed that there had been cheating, and even after its senior lawyers discussed the matter with members of the firm's senior management.

The SEC order requires the company to hire two independent consultants to review its policies and procedures related to ethics and integrity, and to review the company's failure to disclose misconduct during the regulatory investigation.

The fines come as major global accountancy firms review their business models, with both Ernst and Young and a competitor, Deloitte considering spinning their consulting businesses into separate entities.

The Wall Street Journal reported in March that the SEC is looking at the industry to understand how conglomerates with accounting and consultancy arms manage conflicts of interest between those lines of business.