The health giants battle lawsuits linking once popular heartburn drug Zantac to cancer
US retailers stocked up on goods last autumn and winter only to face a demand downturn as consumers divert spending to increasingly expensive fuel and food
They hope the magic mushroom sector can avoid the mistakes made when marijuana became legal
Ernst & Young (EY) admits that dozens of its audit personnel cheated on the ethics portion of the Certified Public Accountant (CPA) exam and that the firm misled US regulators probing the misconduct, according to the Securities and Exchange Commission.
The SEC announced on Tuesday that EY would pay a $100m fine — the largest ever penalty for an audit firm. In addition to violating accounting rules, EY didn’t co-operate with a key part of the regulator’s probe, the agency said.
Almost 50 EY audit employees improperly shared answer keys to the ethics portion of the CPA exam from 2017 to 2021, and hundreds more cheated on continuing professional education courses, the SEC said.
The company did not respond immediately to a request for comment sent outside normal business hours on Tuesday.
Despite having been informed of possibly dishonest behaviour, the firm conveyed to the agency that it had no problem with cheating. The auditor then failed to promptly correct those statements after it launched an internal investigation.
Many EY employees knew their behaviour violated the company’s code of conduct, but some still did it as they couldn’t pass on their own, said the SEC. The firm ultimately disciplined and, in some cases, fired individuals for their actions, according to the SEC, which said its investigation continues.
“It’s simply outrageous that the very professionals responsible for catching cheating by clients cheated on ethics exams,” Gurbir Grewal,head of the SEC’s enforcement division, said in the statement. “It’s equally shocking that Ernst & Young hindered our investigation of this misconduct.”
In addition to the record penalty, EY must hire two separate consultants to examine its ethics policies and another to review disclosure failures.
The firm has been sued by Wall Street’s main regulator other times in recent years. Last August, EY paid about a $10m penalty to the SEC for violating auditor independence rules. In 2016, it was penalised $9m to settle claims of inappropriate relationships with clients.
EY’s record SEC penalty comes after KPMG’s $50m fine in 2019 for cheating in internal training exams, as well as for altering past audit work after receiving stolen information from an industry watchdog. KPMG also admitted wrongdoing in settling that case.
Bloomberg. More stories like this are available on bloomberg.com
Would you like to comment on this article? Register (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.