NEW YORK, April 10 — The US accounting watchdog today said it has hit KPMG Netherlands with a US$25 million (RM118.7 million) civil penalty, a record for the regulator, in response to “egregious” and widespread exam cheating at the foreign affiliate of the major audit firm.
The Public Company Accounting Oversight Board (PCAOB ) cited widespread improper answer sharing at KPMG Netherlands, as well as “multiple misrepresentations” to the watchdog about knowledge of the misconduct. The PCAOB also permanently barred the firm’s former head of assurance Marc Hogeboom from the industry, chair Erica Williams said.
The widespread and “egregious” nature of the answer sharing for exams from 2017-2022 prompted the large fine, which dwarfed the PCAOB’s previous record fine of US$8 million, Williams said. The action also marked the first time the regulator has sanctioned an individual over such cheating, she said.
Stephanie Hottenhuis, CEO of KPMG in The Netherlands, said in a statement that the PCAOB’s conclusions were “damning”.
“It is a hard lesson, but we are determined to learn from this,” she said.
Hogeboom could not be reached immediately for comment.
Exam cheating has plagued the auditor industry for years. KPMG in 2019 agreed to pay US$50 million to the Securities and Exchange Commission for a series of violations, including cheating on internal training exams by improperly sharing answers and manipulating test results.
The PCAOB in a separate actions today imposed US$2 million in fines on Deloitte affiliates in Indonesia and Philippines.
A spokesperson for Deloitte, another of the Big Four accounting firms, did not respond immediately to request for comment.
When asked about the persistence of cheating violations, Williams said the PCAOB this year has launched a culture review initiative as part of its regular inspections process. She declined to provide further details.
“Few things erode trust like impaired ethics,” she said on a call with reporters. — Reuters
