KPMG fined US$25m after alleged exam cheating by Dutch arm
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The news: KPMG Netherlands has been slapped with a USD25 million ($38.31 million) fine by the US’ audit regulator over claims of exam cheating and misinforming investigators.
The numbers: The fine is the largest monetary penalty imposed on an auditing firm by the Public Company Accounting Oversight Board (PCAOB), far exceeding a USD8 million fine against Deloitte’s Brazil unit in 2016 for alleged wrongdoing including issuing false audit reports and attempting to cover up audit violations. Now former-head of assurance, Marc Hogeboom, was also ordered to pay USD150,000 and is permanently barred from associating with a registered accounting firm.
The context: The PCAOB is sanctioning KPMG’s Netherlands arm over violations of PCAOB rules and quality control standards relating to the firm’s internal training program and monitoring of its system of quality control.
The watchdog found that improper answer sharing occurred at the firm between 2017-2022 by hundreds of professionals in connection with tests for mandatory firm training courses. The courses were tied to topics including US auditing standards, professional ethics, and independence. Partners and senior firm leaders, including Hogeboom, were found to have participated in the improper answer sharing.
On top of this, during the PCOAB investigation KPMG submitted and then failed to correct multiple inaccurate representations, including the firm’s claims that it had no knowledge of answer sharing by its personnel until it received a whistleblower report in July 2022. These submissions, reviewed by the firm’s Management Board and Supervisory Board, were false because members of those two Boards had themselves already engaged in answer sharing misconduct before July 2022.
What they said: Robert E. Rice, director of the PCAOB’s Division of Enforcement and Investigations said: “Today’s orders should send a signal to firms and their leadership that they have a responsibility to set an appropriate tone at the top, particularly with regard to issues of integrity and personnel management.”
The source: PCOAB press release
