Accounting giant Ernst & Young admits its employees cheated on ethics exams

NPR ^ | JACQUELINE GANUN

[Honest Nigerian]

In Florida, the ethics exam is part of the application (or renewal process) for a CPA license.
Ethics exam is based on state law; one must show a knowledge of the rules. Until one passes the requisite ethics exam they will not be allowed to even take the CPA exam.
Also, an ethics course must be completed every two years as part of the 80 hours continuing education requirement.
EIGHTY Hours! I know of no other licensed profession that has such a high burden of hours for license renewal (aviation licenses, anyone?).

[Grampa Dave]

Thanks.

[Grampa Dave]

Incredible.

[Night Hides Not]

Continuing education is a racket. When I was self employed, I never had the money to attend “conferences”. I could do 80 “hours” of online CPE in less than 10.

[Fedora]

https://www.wsj.com/articles/ernst-amp-young-agrees-to-pay-99-million-in-lehman-settlement-1382126205

Ernst & Young Agrees to Pay $99 Million in Lehman Settlement
Auditor Was Sued Over Investment Bank’s ‘Repo 105’ Transactions
By Michael Rapoport
Updated Oct. 18, 2013 4:57 pm ET

Ernst & Young LLP has agreed to pay $99 million to settle investor class-action allegations that it turned a blind eye when its audit client Lehman Brothers Holdings Inc. misled investors before the investment bank’s 2008 collapse. . .

* * *

https://elischolar.library.yale.edu/journal-of-financial-crises/vol1/iss1/5/

The Lehman Brothers Bankruptcy D: The Role of Ernst & Young

Abstract
For many years prior to its demise, Lehman Brothers employed Ernst & Young (EY) as the firm’s independent auditors to review its financial statements and express an opinion as to whether they fairly represented the company’s financial position. EY was supposed to try to detect fraud, determine whether a matter should be publicly disclosed, and communicate certain issues to Lehman’s Board audit committee. After Lehman filed for bankruptcy, it was discovered that the firm had employed questionable accounting with regard to an unorthodox financing transaction, Repo 105, which it used to make its results appear better than they were. EY was aware of Lehman’s use of Repo 105, and its failure to disclose its use. EY also knew that Lehman included in its liquidity pool assets that were impaired. When questioned, EY insisted that it had done nothing wrong. However, Anton R. Valukas, the Lehman bankruptcy examiner, concluded that EY had not fulfilled its duties and that probable claims existed against EY for malpractice. In this case, participants will consider the role and effectiveness of independent auditors in ensuring complete and accurate financial statements and related public disclosure.

[9YearLurker]

Does it have to dismiss—and refer for any appropriate prosecution—its cheating staffers (presumably including, by now, some partners)?

How about its liability to all its clients for having fraudulently presented its work and credentials? Many years of refunds from the firm all around?

[Hyman Roth]

Believe it or not those were the same scores I had.

[Night Hides Not]

From what I remember, if you had a 75 after the first review, they set it aside. It was sent back for additional review(s) if you had an initial score of 67-74. It was much more subjective back then, before the preponderance of multiple choice questions.

I didn't realize it at the time, but my professor's style of teaching was structured for the best success on the CPA exam, when essay questions dominated the test.

Like I said before, I didn't take the CPA until I was 37, after military service and other jobs. Kids came along, and accounting provided a steadier paycheck.