Posted on 06/28/2022 8:34:14 AM PDT by BenLurkin
Ernst & Young, one of the top accounting firms in the world, is being fined $100 million by federal regulators after admitting its employees cheated on their ethics exams.
For years, the firm's auditors had cheated to pass key exams that are needed for certified public accountant licenses, the Securities and Exchange Commission found. Ernst & Young also had internal reports about the cheating but didn't disclose the wrongdoing to regulators during the investigation.
"It's simply outrageous that the very professionals responsible for catching cheating by clients cheated on ethics exams of all things," Gurbir S. Grewal, director of the SEC's Enforcement Division, said in a release.
The fine is the largest penalty ever imposed by the SEC on an audit firm.
The CPA, or certified public accountant, licenses are needed by auditors to evaluate the financial statements of companies and ensure they are complying with laws.
However, the SEC says that a "significant number" of Ernst & Young audit professionals specifically cheated on the ethics component of the CPA exams that were required for their accounting jobs.
Audit firms serve a critical gatekeeping role in the financial markets and it is their jobs to ensure integrity of the financial reporting done by companies. It's why the independence and integrity of these firms are paramount.
Because it's their job to hold others accountable, Ernst & Young — one of the "big four" accounting firms — says it holds itself to a high standard of ethics. In fact, the firm's entire global code of conduct is based on an "ethical" framework.
"At EY, nothing is more important than our integrity and our ethics. These core values are at the forefront of everything we do," Brendan Mullin, a spokesperson for Ernst & Young, said in an email to NPR. "Our response to this unacceptable past behavior has been thorough, extensive, and effective."
Many of the employees interviewed during the federal investigation said they knew cheating was a violation of the company's code of conduct but did it anyway because of work commitments or the fact that they couldn't pass training exams after multiple tries.
The SEC said that the cheating went on for many years, going back to 2012. Following the discovery of an earlier cheating scheme, the firm took disciplinary actions and repeatedly warned its audit professionals not to cheat on exams. Still, the cheating continued.
Along with paying the $100 million fine, Ernst & Young has to audit itself and report the findings to the SEC, including an assessment of its ethics and integrity training. It'll also be reviewed by independent consultants that the firm will have to pay for.
The cheating scandal comes just a couple of weeks after the Financial Times reported that Ernst & Young is planning to split its auditing and consulting arms, a huge shakeup in the accounting world that would award its partners up to $8 million in shares each.
Liars and cheaters everywhere!
The irony is thick here.
Moreso, how could one trust such an organization.
That goes a long way to explain the coked-up harlot that left them to become CFO of the last company I worked at before I departed for the much better realm of self-employment.
It took me 3 tries to pass the CPA exam 30 years ago, before multiple guess questions dominated the test. BTW, I took it 15 years after college, as there were other pursuits/careers along the way.
What got me over the top were the essay questions. Credit goes to my accounting professor in college. He gave two tests every semester, a mid-term and a final. All essay questions, at least two or three made you start your answer with, "based on the information you've given me, I cannot answer the question." From there, you had to explain the accounting theory involved.
He also used no numbers in those 30 semester hours of instruction. It was all accounting theory. Brilliant man, brilliant teacher. He was larger than life, and a good friend by your senior year. The stories I could tell about him, 45+ years after graduation.
Back on topic, anyone who has been found guilty of cheating on the ethics exam should be fired, and their license revoked.
bttt
> “At EY, nothing is more important than our integrity and our ethics.” <
“And also not getting caught. That’s important too,” the spokesperson added.
Welcome our next graduating class of politicians.
Hey they got away with it for ten years
The irony here is stupendous.
Not that asking the SEC to audit EY would be much different.
Their crooks just use what they see to find new players when they exit government for the private world.
It was all good natured, nothing personal, and he had the same sense of wicked humor as my stepfather.
He taught at GU for approximately 40 years, and he signed his paycheck back to the university. He had a very successful CPA practice in Spokane, and was considered the tax expert of the Inland Empire: Eastern Washington to Western Montana.
Early in Gonzaga's NCAA run, I'd be asked about "what was it like to go to Gonzaga?", by alumni from huge state schools. I'd dust off a couple of stories, with the usual response, "damn, my college experience was nothing like that." We had 2000 undergrads at the time, 800 lived on campus. Going to GU was one of the best decisions I ever made.
Two months after I passed my Series 7, Hutton pleaded guilty of 2000 counts of check kiting. The firm basically went under within two years, and I decided to put my accounting degree to use.
The same thing should happen to Ernst & Young.
If I'm a headhunter, there should be thousands of E&Y CPAs looking for greener pastures, so long as they weren't one of the cheaters.
Isn’t this skill in this area a requirement for that profession? In any event, they got caught, and therefore, they failed.
Oh Lordy. If you can’t pass an ethics exam you’re an idiot or have no moral compass
That’s funny. The Feds are worried about other peoples ethics.
It took me three tries to pass the CPA exam, the first time fresh out of college and no prep, I failed miserably. Then a few years of private accounting, two years of public accounting and a prep course, I passed part and the rest the time after that. The parts were different then - Auditing, Accounting (Practice) I and II, Accounting Theory and Law. Back then, you could get certified with only a batchelors degree, most if not all states now require at least a master’s degree.
I think the “Ethics Exam” is a separate test required by some states. I think some states allow taking the test on line, I’d guess that’s where it would be easy to cheat. But I can’t imagine cheating on the exam. Working in public accounting is hard work, and throwing it away like that is foolish.
The last exam I took was a ham radio exam, and even taking it on-line it is hard to cheat, you have to scan the room you are taking the exam in, and have a camera on yourself. If you’d rather travel to the take the exam, the sit-down exam is proctored.
In my state we are required to take 4 hours of ethics every 3 years, so I usually just work in 2 per year. I take mostly self study and a few on-line courses, as that is best for my schedule, no traveling and blocking out time from work for seminars, (I am in a pretty remote area, and hour and a half to anywhere that might have a course).
LOL, they should start at 1600 Pennsylvania Avenue.
Okay, identify them, rescind their licenses, refund clients for “work” performed by these people. If I were a customer, I’d be demanding accountability, transparency, and refunds. I beleive E&Y does work for the government (federal, state, and local). I presume this is contract fraud?
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