US Slaps Audit Firm With Record-Breaking $100 Million Penalty Because Employees Allegedly Cheated

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Kay Smythe News and Commentary Writer
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The Securities and Exchange Commission charged Ernst & Young LLP with a $100,000,000 fine Tuesday for behaviors related to cheating and withholding evidence.

The SEC claimed that Ernst & Young employees cheated in order to maintain their Certified Public Accountant (CPA) licenses, and that the firm withheld evidence of such misconduct from the SEC, according to a press release from the SEC. Ernst & Young admitted to the cheating and withholding of information, and agreed to pay the $100 million penalty, as well as undertaking extensive remedial measures to “fix the firm’s ethical issues,” the release continued.

The fine is the largest ever issued on an audit firm by the SEC, according to NPR. (RELATED: Major Cosmetics Maker Revlon Files For Bankruptcy)

“his 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,” SEC Director of Enforcement Gurbir S. Grewal said in the statement, “And it’s equally shocking that Ernst & Young hindered our investigation of this misconduct. This action should serve as a clear message that the SEC will not tolerate integrity failures by independent auditors who choose the easier wrong over the harder right.”

Nearly 50 Ernst & Young audit professionals cheated in the ethics components of their CPA exams, as well as other professional education courses required to keep their CPA licenses, according to CBS News. Hundreds of others cheated on their professional education courses, and a huge number of professionals who did not cheat were aware that their colleagues did and facilitated their actions, the outlet noted.