- Affiliates of two of the Big Four accounting firms, KPMG and Deloitte, have been fined millions by the US Public Company Accounting Oversight Board for allowing cheating on internal training tests. Reuters.com
- KPMG Netherlands was fined $25M, while its former head of assurance was fined $150K. Deloitte Indonesia and the Philippines were each fined $1M, with its head of professional practice fined $10K and banned from working for an accounting firm for at least three years. CFO
- Hundreds of employees, including partners and senior leaders, were caught sharing answers from 2017 to 2022. wsj.com (LR: 3 CP: 5)
- KPMG Netherlands' $25M fine was the largest ever imposed by the Public Company Accounting Oversight Board. hindustantimes.com
- The two Deloitte affiliates were found to have lacked sufficient quality controls, leading to their own culture of widespread answer-sharing, though they self-reported the violations and established quality control measures to remedy the problem. wsj.com (LR: 3 CP: 5)
- This follows similar penalties against Big Four firms imposed by the US Securities and Exchange Commission. In 2019, KPMG was fined $50M for answer-sharing and test result manipulation, and Ernst & Young was fined $100M in 2022 over cheating. Reuters.com
Narrative A:
- These fines are appropriate because KPMG knew about the cheating as far back as 2020 but ignored it until a 2022 whistleblower complaint. The fact that many accounting firms are riddled with ethical missteps is no excuse. Certified Public Accountants have a duty to uphold the highest standards and must be punished and scrutinized until they prove capable of doing so.
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Narrative B:
- Teaching ethics with these exams is foolish. Accountants would be better off learning from experience because the examples these tests pose are too clean-cut. Employees should be allowed to trust their gut and sound the alarm when something feels wrong.
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