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NC_Tigah
LSU Fan
Carolinas
Member since Sep 2003
111522 posts

When A Headline Becomes An Instant Meme -- E&Y Employees Caught Cheating on Ethics Exams

Yikes! The jokes write themselves.
quote:


Press Release
Ernst & Young to Pay $100 Million Penalty for Employees Cheating on CPA Ethics Exams and Misleading Investigation
Largest Penalty Ever Imposed by SEC Against an Audit Firm

FOR IMMEDIATE RELEASE
2022-114


Washington D.C., June 28, 2022 — The Securities and Exchange Commission today charged Ernst & Young LLP (EY) for cheating by its audit professionals on exams required to obtain and maintain Certified Public Accountant (CPA) licenses, and for withholding evidence of this misconduct from the SEC’s Enforcement Division during the Division’s investigation of the matter. EY admits the facts underlying the SEC’s charges and agrees to pay a $100 million penalty and undertake extensive remedial measures to fix the firm’s ethical issues.

“This 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,” said Gurbir S. Grewal, Director of the SEC’s Enforcement Division. “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.”

EY admits that, over multiple years, a significant number of EY audit professionals cheated on the ethics component of CPA exams and various continuing professional education courses required to maintain CPA licenses, including ones designed to ensure that accountants can properly evaluate whether clients’ financial statements comply with Generally Accepted Accounting Principles.

EY further admits that during the Enforcement Division’s investigation of potential cheating at the firm, EY made a submission conveying to the Division that EY did not have current issues with cheating when, in fact, the firm had been informed of potential cheating on a CPA ethics exam. EY also admits that it did not correct its submission even after it launched an internal investigation into cheating on CPA ethics and other exams and confirmed there had been cheating, and even after its senior lawyers discussed the matter with members of the firm’s senior management. And as the Order finds, EY did not cooperate in the SEC’s investigation regarding its materially misleading submission.
...

The SEC’s investigation, which is continuing, has been conducted by Ian Rupell and supervised by Rami Sibay. The SEC thanks the PCAOB for its assistance in this matter.


horsesandbulls
LSU Fan
Destin, FL
Member since Jun 2008
4518 posts
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dude.....



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Mingo Was His NameO
LSU Fan
Brooklyn
Member since Mar 2016
25310 posts
 Online 

When I was at Big 4 they stayed on our arse about "cheating" on the required online trainings. A couple of audit people were caught taking them together and they didn't lose their jobs, but it was very not good.

I don't think the crime here was people cheating because no one pays attention to those things, but EY covering it up is a pretty bad look.


LSUFanHouston
LSU Fan
NOLA
Member since Jul 2009
31039 posts

quote:

When I was at Big 4 they stayed on our arse about "cheating"


I never went Big 4... but I know many who did.

The story they always told me was that they wanted you spending as little time as possible on CPE / exams because they needed you to be billable more.

Was that your experience?

If a firm is on the employees to finish as fast as possible, I can see where the incentive is there to cheat.


Mingo Was His NameO
LSU Fan
Brooklyn
Member since Mar 2016
25310 posts
 Online 

quote:

The story they always told me was that they wanted you spending as little time as possible on CPE / exams because they needed you to be billable more.

Was that your experience?


Your billable/utilization target is your target. Admin and or things like CPE don't factor that in. So if you are expected to be 90% billable, you're expected to be 90% billable and you can find time for your Admin stuff.

Of course, there's times where your utilization targets are going to be lower than others so that's when you'd want to squeeze most of that time in.

Like a ton of corporate shit, you have two executives fighting over resources so as an employee you are getting information out of two sides of the corporate mouth. Risk management is hounding you about CPE and independence training and local partners are hounding you about making as much money as possible.
This post was edited on 6/28 at 10:55 am


BlackAdam
Nicholls St. Fan
Member since Jan 2016
5842 posts

quote:

I never went Big 4... but I know many who did.

The story they always told me was that they wanted you spending as little time as possible on CPE / exams because they needed you to be billable more.

Was that your experience?

If a firm is on the employees to finish as fast as possible, I can see where the incentive is there to cheat.


The Big 4 firm I was with gave me no issue when taking CPE. They also expected me to be billable. It was on me to manage my career and ensure all targets were met. It was common practice for our firm to completely shut down from a few days before Christmas to a few days after New Year. Perfect time to squeeze in some CPE when there was no expectation to be billable.


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31
Weekend Warrior79
LSU Fan
Member since Aug 2014
11758 posts
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I never did the Big 4 route either, but I worked for a firm formed by former Big 4 partners. They were big on the talking points of supporting and helping you with whatever you needed through the exams. But, if you showed promise they would make it damn difficult for you to have the time to study to take the test.
I know several people that left because their exams would lapse before they could get all 4 done. As soon as they went somewhere else, they passed the remaining sections within 2-3 quarters.


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23
LSUFanHouston
LSU Fan
NOLA
Member since Jul 2009
31039 posts

quote:

Like a ton of corporate shit, you have two executives fighting over resources so as an employee you are getting information out of two sides of the corporate mouth. Risk management is hounding you about CPE and independence training and local partners are hounding you about making as much money as possible.


Bingo


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Turf Taint
LSU Fan
New Orleans
Member since Jun 2021
4050 posts

100 million ironies in this news


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Shankopotomus
USA Fan
Social Distanced
Member since Feb 2009
20724 posts
 Online 

bout time ... while it is inconvenient and such for licensed professionals ... CPE and ethics type training is part of the job ..... which far too many simply don't take seriously enough

now let's see if there's any government folks that cheat on their ethics tests


Big4SALTbro
Member since Jun 2019
10011 posts

While denying that this factored into the split it 100 percent was at least a part of it.


Mingo Was His NameO
LSU Fan
Brooklyn
Member since Mar 2016
25310 posts
 Online 

quote:

While denying that this factored into the split it 100 percent was at least a part of it.


Im not sure that's accurate. The other Big firms are almost certainly going to do the same thing.


tiger91
USA Fan
In my own little world
Member since Nov 2005
35038 posts

Who do they pay this penalty and how does it get used?? In before #wasted.
This post was edited on 6/28 at 10:03 pm


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20
KillTheGophers
Yale Fan
Member since Jan 2016
5598 posts

Appraisers are the biggest rip off in the financial and accounting world.

Big4 CPA firms are the second biggest rip off in the financial and accounting world.

This article disgust me - but does not surprise me.


Mingo Was His NameO
LSU Fan
Brooklyn
Member since Mar 2016
25310 posts
 Online 

quote:

Big4 CPA firms are the second biggest rip off in the financial and accounting world.


Disagree, they're expensive, maybe too expensive, but so if fricking shite up with Uncle Sam


KillTheGophers
Yale Fan
Member since Jan 2016
5598 posts

Regional is the way to go.

Tax, audit, the whole 9 yards. And way better billing practices.



Mingo Was His NameO
LSU Fan
Brooklyn
Member since Mar 2016
25310 posts
 Online 

quote:


Regional is the way to go.


Well that just depends on your needs. There's not that many regional firms that can handle complex international issues. Some can certainly handle complex domestic issues, but do they have the resources to be a one stop shop on all different tax impacts, for example, on a merger or restructuring? That's where these huge forms can provide value.

FWIW, I don't really have a dog in a fight, but if there wasn't value in the Big 4 they wouldn't be making more and more money every year
This post was edited on 6/28 at 10:29 pm


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30
Big4SALTbro
Member since Jun 2019
10011 posts

I’ve heard PWC actually has a internal 3 way split. I haven’t heard any rumblings from KPMG but I agree I can see all 4 doing it. They very rarely don’t all go the same direction.

The split is majority driven by the desire to limit the cumbersome rules that come with dealing with audit.

I could see the punishment coming as a small piece. It is EY after all and all angles should be covered.


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Big4SALTbro
Member since Jun 2019
10011 posts

It depends on your business. If you are in all 50
States or a majority then you probably want big 4 working for you or at least doing some sizable work.

The reason being is if they are operating properly they can deploy resources from every region to help an issue.

The billing is more expansive but big 4 usually has a contact in any place you need already.

I say regional all the way if your operations are in one or two close regionals. The billing will be a lot cheaper and it will have less admin associated with it and a regional power likely has plenty of big 4 alums in it. Perhaps the best ones because they have big 4 talent but got out likely because the admin headaches so they are more quick action people.

I’ve had this discussion in the past with a good friend about the differences big 4, what I call the other 8 so your bigger regional powers, and then that group from 12-50.

Big 4 covers the entire US and world plus in normal times operates as a factory where if someone on the team leaves then the next cog goes in and you as the client doesn’t really notice. I think the last piece is gone if we look at the current talent state. Even big 4 doesn’t have enough people going from SM down to staff.

The other 8 or so which is your BDOs, GT, and such have a national brand in a way but each really has a few states that they can dominate in. This group has big 4 alum at the top and is a feeder ground for big 4 to take associates from. They can bill less, they usually have a national team and away to service a client that is fully national but can’t do it as easily. Their teams can still operate as a cog.

Once you get out of that next 8 or maybe 12 now, you get more regional expert firms and some with niches and you can’t go to them as a one stop shop. You also will see a pretty wide gap between top teams or areas. These are good firms with plenty of smart people, but they dont have the same bench as a big 4. If a big fish talent leaves they will take a bit to recover. They can do a great job though on projects.

I’ve been at all 3 levels of firm, I actually really liked the regional level but you have to have the right people around.


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Weagle25
Auburn Fan
THE Football State.
Member since Oct 2011
42781 posts

quote:

I don't think the crime here was people cheating because no one pays attention to those things, but EY covering it up is a pretty bad look.

It’s just kinda crazy to me that it got to upper management and they were just like “meh no big deal”

Why risk reputation when employees can put an ounce of effort in and pass it? And you don’t even have to really stop the cheating but pretend to care about it.


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