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Home Business News Around the World

EY agrees to pay $100m to US Securities and Exchange Commission over exam malpractice

Ubah Jeremiah Ifeanyi by Ubah Jeremiah Ifeanyi
June 28, 2022
in Around the World
EY
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EY, one of the Big Four auditing firms, has agreed to a record $100 million settlement with the US Securities and Exchange Commission to settle claims that numerous EY workers falsified answers on an ethics exam and that the company misled investigators.

The penalty, which is double the amount KPMG was forced to pay in 2019 for exam-cheating and unlawful tip-offs, is the biggest the US Securities and Exchange Commission has ever assessed on an auditor according to Financial Times.

This enormous fine comes as EY explores global plans to separate its audit and advising businesses, a move that would exclude consultants from future regulatory fines and monetary judgments for wrongdoing or carelessness on the part of the company’s auditors.

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What SEC is saying

The SEC order claims that 91 EY employees asked for, used, or shared answers with coworkers.

Gurbir Grewal, director of the SEC’s enforcement division said, “This action involves breaches of trust by gatekeepers within the gatekeeper entrusted to audit many of our nation’s public companies.”

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He added, “It’s simply outrageous that the very professionals responsible for catching cheating by clients cheated on ethics exams of all things.”

He 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.”

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EY acknowledged the SEC’s conclusions and declared that it was observing 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”.

What you should know

  • SEC stated that 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.
  • The order handed down on Tuesday is EY’s latest regulatory run-in. The SEC has filed five cases against the auditor since 2014.
  • 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. A “significant” number of employees also failed to report the violations, the agency said.
  • The SEC will also assign two impartial consultants to EY in addition to the penalties. As they examine EY’s submissions to regulators, one will examine policies on ethics and integrity while the other will have access to privileged material that has not been made accessible to the SEC as well as the authority to enact employment actions and other remedies.

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Tags: EYUS Securities and Exchange Commission

Comments 1

  1. Ahmed Ali Endrise says:
    June 28, 2022 at 4:00 pm

    I am happy today if it’s true or not

    Reply

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