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KPMG, Deloitte affiliates hit with US penalties for exam cheating


The U.S. accounting watchdog on Wednesday imposed record fines on two of the Big Four auditors, KPMG and Deloitte, and barred senior leaders at the firms over exam cheating, a problem that has dogged the audit industry for years.

The U.S. accounting watchdog barred senior leaders at the firms over exam cheating.(REUTERS /File)

The Public Company Accounting Oversight Board (PCAOB) said it had levied a $25 million civil penalty against KPMG Netherlands in response to “egregious” and widespread exam cheating at the firm from 2017-2022.

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The PCAOB announced disciplinary actions against KPMG Netherlands and its former Head of Assurance, Marc Hogeboom, for systemic breaches spanning a five-year period.

The violations primarily centred around the inappropriate sharing of answers to mandatory training exams within the firm. The PCAOB’s investigation unearthed a culture of misconduct that permeated the ranks of KPMG Netherlands, with hundreds of professionals, including senior leaders, involved in answer-sharing practices.

The PCAOB’s imposition of a $25 million civil money penalty on KPMG Netherlands marked the largest fine ever levied by the regulatory body. The PCAOB permanently barred the KPMG Netherlands’ former head of assurance Marc Hogeboom from the industry.

PCAOB Chair Erica Y. Williams minced no words in condemning the unethical behaviour and said, “The growth and breadth of exam cheating in this case was enabled by the firm’s failure to take appropriate steps to monitor, investigate, and identify the potential misconduct.”

“This misconduct reveals an inappropriate tone at the top and a complete failure by firm leadership to promote an ethical culture worthy of investors’ trust.”

Stephanie Hottenhuis, CEO of KPMG in The Netherlands, said in a statement that the PCAOB’s conclusions were “damning”.

“It is a hard lesson, but we are determined to learn from this,” she said.

The PCAOB also cracked down on Deloitte entities, Imelda & Raken (Deloitte Indonesia) and Navarro Amper & Co. (Deloitte Philippines), along with the firms’ former National Professional Practice Director, Wilfredo Baltazar. Similar to the KPMG case, both Deloitte firms were found guilty of widespread answer sharing on internal training tests.

Deloitte Philippines’s audit partners and personnel were implicated in answer sharing practices dating back to 2017, while Deloitte Indonesia’s misconduct occurred between 2021 and 2023.

A Deloitte spokesperson said the answer sharing was “unacceptable” and that the firm would continue to serve clients with high quality and according to professional standards.

Exam cheating has plagued the auditor industry for years. KPMG in 2019 agreed to pay $50 million to the U.S. Securities and Exchange Commission (SEC) for a series of violations, including cheating on internal training exams by improperly sharing answers and manipulating test results. In 2022, Ernst & Young agreed to a $100 million fine, the SEC’s largest ever against an audit firm, over exam cheating.

(With agency inputs)



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