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The U.S. accounting watchdog on Wednesday imposed civil penalties on affiliates of two of the Big Four auditors, KPMG and Deloitte, over exam fraud, a problem that has long dogged the auditing industry, and locked out senior executives from both companies. Ta.
The Public Company Accounting Oversight Board (PCAOB), which oversees public company auditors, has fined KPMG Netherlands a record $25 million ($470 million) for “egregious” and widespread exam fraud. announced that it had imposed a civil fine of Rand 10,000. Worked at the company from 2017 to 2022.
The PCAOB has permanently banned Mark Hogeboom, former head of assurance at KPMG Netherlands, from the industry, according to Chairman Erica Williams.
In a separate action, the PCAOB imposed $2 million in fines on Deloitte affiliates in Indonesia and the Philippines for violating regulators' rules and quality control standards over the widespread sharing of answers to internal training tests. It also sanctioned Deloitte Philippines executive Wilfredo Baltazar over the issue.
Stephanie Hottenhaus, CEO of KPMG in the Netherlands, said in a statement that the PCAOB's conclusions were “terrible.”
“This is a tough lesson, but we are determined to learn from this,” she said.
A Deloitte spokesperson called the sharing of responses “unacceptable” and said the company would continue to provide high-quality services to clients in accordance with professional standards.
Hogeboom and Balthazar could not immediately be reached for comment.
Examination fraud has long plagued the auditing industry. In 2019, KPMG agreed to pay $50 million to the U.S. Securities and Exchange Commission (SEC) for a series of violations, including improper sharing of answers to internal training exams and manipulation of exam results. did. In 2022, Ernst & Young agreed to a $100 million fine for exam fraud, the SEC's largest fine ever for an auditing firm.
Asked about continued violations, Williams said the PCAOB began a culture review effort this year as part of its regular inspection process. She declined to provide further details.
“There are few things that undermine trust more than a decline in ethics,” she said on a call with reporters.
