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EY fined $100m over cheating in ethics exams


In yet another blow to the reputation of the profession, EY has been ordered to pay a $100m after dozens of auditors cheated in an ethics exam.

30th Jun 2022
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Regular readers of this column may feel a sense of déjà vu. However, what feels like a repetition of an old story in fact reflects wrongdoing on an even greater industrial scale than previously revealed.

At the beginning of the year, I reported on massive fines for PwC in North America as a result of institutional cheating in exams by hundreds of members of staff, apparently sanctioned at a high level.

In that article, I also noted that KPMG had been found guilty of a similar offence.

These offences seemed egregious at the time but when compared with a story that broke this week relating to EY, they begin to pale into relative insignificance.


In the past, ethics was primarily a subject discussed at great length by philosophers at ancient universities.

However, it was also of importance to accountants, since we are obliged to follow ethical guidelines while playing our trade.

More recently, it has been hard to keep ethics out of the news, primarily because of the antics carried on by the Prime Minister.

In recent times, not only has he driven out two ethics advisers through behaviour that they allegedly regarded as unethical but also rewritten the ministerial code, which relates to such matters.

The obligation on ministers to “uphold the very highest standards of propriety” has disappeared, while the Nolan principles of public life are also no longer specifically highlighted. For anyone who happens to have forgotten these seven standards, they are “integrity, objectivity, accountability, transparency, honesty and leadership in the public interest”.

One would imagine that any accountant reading this column would take it for granted that they, their colleagues and everyone else in what should be a highly esteemed profession would apply such standards without even thinking.

If so, they would be wrong.


My February article reported on institutional exam cheating by PwC, which found itself shelling out the best part of US$1m after fines levied by the US Public Company Accounting Oversight Board and the Canadian Public Accountability Board.

This was because the firm had violated rules and quality control standards over a four-year period in connection with “tests designed to help the firm’s audit professionals satisfy the requirements maintaining that accounting certifications”. Apparently 1,200 professionals up to partner level were involved.

I also noted that KPMG had previously been found guilty of similar offences in both Australia and America.

EY standards

Not wishing to be outdone by their Big Four brethren, EY has gone one step further.

Before going into detail, it is worth quoting from the EY UK website. “It is not just regulators and public policy makers who are demanding higher standards of business conduct and ethics – employees, customers, activists and investors are increasingly exposing companies who don’t measure up.” Then continues “Companies that do not adhere to the higher standards being set by regulators, risk losing the trust and confidence of not only investors but also other stakeholders including wider society.”

Regrettably, the firm does not believe in taking its own advice.

EY practice

While those extracts were drawn from the EY UK website, the activities under the microscope once again involve activities by the practice on the far side of the Atlantic and CPA ethics exam cheating.

According to the SEC “EY admits the facts underlying the SEC’s charges and agrees to pay a $100 million penalty and undertake extensive remedial measures to fix the firm’s ethical issues.”

EY reportedly admitted that 49 of its audit personnel cheated on the ethics portion of the Certified Public Accountant exam.

The anger expressed by Gurbir S. Grewal, director of the SEC’s enforcement division should be X-rated. “This action involves breaches of trust by gatekeepers within the gatekeeper entrusted to audit many of our Nation’s public companies. It’s simply outrageous that the very professionals responsible for catching cheating by clients cheated on ethics exams of all things and it’s equally shocking that Ernst & Young hindered our investigation of this misconduct.”

Apparently, the misbehaviour dragged on across a number of years and multiple offices, eventually involving hundreds of auditors.

In case anyone thinks that cheating in ethics exams might be the kind of thing that one could do without noticing, apparently “EY employees cheated on these ethics exams even after being warned repeatedly not to cheat”, while hundreds more helped their colleagues cheat by sharing answer keys.

A shout out the Deloitte

This might be tempting fate but so far it appears that Deloitte is the only one of the Big Four that has not been found guilty of helping employees to cheat in exams and therefore deserve our congratulations.

It is remarkable that in what used to be a respectable profession one needs to highlight a major player for behaving ethically.

What next?

If I were running the UK end of any of these firms, I would be spending considerable time distancing myself from my American cousins.

It is quite clear that top firms of accountants have begun to behave rather like Boris Johnson, ie, they think that the law is for the little guys.

Once again, the accountancy profession is being dragged through the dirt and it can’t do any of us any good.

Perhaps it is time for the regulatory bodies to get a lot more serious. This should involve not only significant fines for firms but also lengthy, possibly lifetime, bans for anyone found cheating or facilitating cheating.

Personally, I would extend this to those running firms where such behaviour is carried out on a wide scale since ultimately, they are the people that need to sort out this mess.

Replies (4)

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By Hugo Fair
30th Jun 2022 19:33

"This should involve not only significant fines for firms but also lengthy, possibly lifetime, bans for anyone found cheating or facilitating cheating.
Personally, I would extend this to those running firms where such behaviour is carried out on a wide scale since ultimately, they are the people that need to sort out this mess."

Surely you've got your priorities as skewed as those whom you (rightly) excoriate?
1. Apply penalties to the most senior partners individually (whether substantial fines/costs or imprisonment or a period of being barred from practising); then
2. Move down the food chain to all the other partners (say by making it illegal for there to be any profit share associated with the years in which wrongdoing has been proven); and only then
3. Consider some form of penalty via training (like speed awareness courses) for those who did the wrong - and make those courses off-site with attendees not receiving pay for the day.

The current situation is almost the cause of all the wrongdoing ... in that fining the partnership doesn't cause real pain to any individuals - and those who are doing the wrongs (often under orders) are treated as replaceable cannon fodder.

Thanks (2)
By Paul Crowley
30th Jun 2022 21:19

Cheating in exams
ACCA students regularly banned.

Thanks (2)
By JustAnotherUser
01st Jul 2022 15:07

...."and Misleading Investigation" this is the better headline.

charged EY for cheating to obtain CPA licenses, and for withholding evidence of this misconduct from the SEC’s Enforcement Division investigations

40bn turnover for EY, cheated over a number of years.... a pity fine when it should be a crime and a % based fine

Thanks (1)
By JamesDS
04th Jul 2022 14:13

As an aside; lament how far the profession has fallen that it is now compared with our Prime Minister. in the league table of unethical things:

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