WASHINGTON — Accounting firm Ernst & Young is being fined $100 million by the Securities and Exchange Commission after admitting its employees cheated on vital ethics exams for several years.
The fine is the largest penalty ever imposed by the SEC against an audit firm, the commission announced Tuesday.
Ernst & Young admitted a significant number of its employees cheated on the ethics component of the Certified Public Accountant exam over multiple years, the SEC said. Beyond ethical issues, the company admitted to the SEC it had withheld reports about the cheating during an investigation.
In addition to the heavy fine, the accounting firm is subject to “extensive remedial measures” to fix the firm’s ethical issues, the SEC said in a release. It will have two independent consultants, one to review the company’s ethics and integrity policies and the other to review disclosure failures.
“It’s simply outrageous that the very professionals responsible for catching cheating by clients cheated on ethics exams of all things,” said Director of the SEC’s Enforcement Division Gurbir S. Grewal.
The accounting firm, which audits many of the nation’s public companies, also admitted its employees cheated on educational courses required to maintain certified public accountant licenses.
CPA licenses are designed to ensure the accountants can properly evaluate their clients' financial statements and whether they comply with laws.
“The SEC will not permit the submission of misleading information or any action that delays or frustrates our mandate to protect investors and our markets,” said Melissa R. Hodgman, Associate Director of the SEC’s Enforcement Division.
