The U.S. Securities and Exchange Commission (SEC) announced charges against Ernst & Young Tuesday, fining the auditing company $100 million; “the largest penalty ever imposed by SEC against an audit firm.”


According to the release, auditors from Ernst & Young, one of the “big four” accounting firms, cheated on professional education courses to maintain its certified public accountant licensure. Over years, employees also cheated on the ethics portion of the CPA exams. The company has admitted to these charges.

Additionally, the company made false submissions to the SEC enforcement division stating it “did not have current issues with cheating,” when it was aware of the CPA exam fraud. After an internal investigation revealed the scale of these problems, senior lawyers and Ernst & Young’s senior management did not correct the information given to the SEC.

“It’s simply outrageous that the very professionals responsible for catching cheating by clients cheated on ethics exams of all things,” said the SEC Director of the Enforcement Division, Gurbir S. Grewal. “And it’s equally shocking that Ernst & Young hindered our investigation of this misconduct.”

Along with the $100 million fine, Ernst & Young will have to “undertake extensive remedial measures to fix the firm’s ethical issues.”

Other cases of recent fraud

In 2019, KPMG was fined $50 million for using “stolen information to alter some of the accounting firm’s previous audit work” and like Ernst & Young, was found to have cheated on training exams according to Reuters. At the time it was one of the SEC’s largest fines against an audit firm.

In March, The Wall Street Journal reported the SEC is undertaking a “sweeping investigation of conflicts of interest” at the largest accounting firms in the nation including the Big Four: Deloitte & Touche, Ernst & Young, KPMG, and PricewaterhouseCoopers.

These four firms audit 66% of all public companies and have received a large amount of nonaudit fees from companies that have hired them to perform independent audits, presenting a potential conflict of interest.