Ernst Young, a Big Four accounting firm, will pay $100 million for the US Securities and Exchange Commission SEC charges that its auditors cheated on CPA certified public accounting exams and misled the agency's investigators.
The auditor admitted to the charges and agreed to pay what the SEC said is its largest fine against an auditor.
Brendan Mullin, EY media relations director, said the firm's response was thorough, extensive and effective, and EY acknowledges the findings determined by the SEC. Our ethics and integrity are the most important things at the EY. The CPA is the key qualification for accountants in the United States.
The SEC said that EY has agreed to undertake extensive remedial measures to fix the firm's ethical issues.
The Wall Street watchdog found that 49 EY professionals received or circulated answer keys to CPA license exams, while hundreds of others were cheated to complete the continuing professional education components relating to CPA ethics.
The gatekeepers entrusted with the task of auditing many of our nation's public companies have breached their trust. The very professionals responsible for catching clients cheating on ethics exams are simply outrageous," Gurbir Grewal, the SEC's enforcement director, said in a statement.
Grewal said that Ernst Young was equally shocking that Ernst Young prevented our investigation of this misconduct.
EY submitted to the SEC that it did not have issues with cheating when, in fact, the firm had been informed of potential cheating on a CPA ethics exam by a member of staff, the SEC said.
It said that EY admitted it did not correct its submission even after an internal EY investigation confirmed that there had been cheating, and even after its senior lawyers discussed the matter with the firm's senior management.
The SEC found that EY was in violation of a PCAOB rule that required the firm to maintain integrity in the performance of a professional service, which was found by the Public Company Accounting Oversight Board.
The SEC has ordered EY to retain two independent consultants to help remediate its deficiencies. One will review the firm's policies and procedures relating to ethics and integrity. The SEC said that the other will examine EY's conduct regarding its disclosure failures, including whether EY employees contributed to the firm s failure to correct its misleading submissions.