UK’s audit watchdog calls on top accounting firms to boost measures against exam cheating
The UK’s accounting watchdog has called on Britain’s seven largest auditors to improve the measures they have in place to prevent cheating on exams, following a series of international cheating scandals involving the world’s biggest audit firms.
In a letter seen by City PM, the UK’s Financial Reporting Council (FRC) called on the country’s top seven audit firms and major accounting sector professional bodies to “improve the controls and processes they have in place” to identify and eradicate exam cheating.
The letter comes after the FRC in July wrote to the UK’s ‘Tier 1’ auditors – EY, KPMG, PwC, Deloitte, BDO, Grant Thornton, and Mazars – calling on them to outline the measures they have in place to identify and prevent cheating on exams.
In the letter published today, the FRC said its July review had uncovered “instances of cheating” at Tier 1 audit firms, including at KPMG’s UK business, but said the information that has been provided to it to date has not revealed “systemic issues related to cheating at firms.”
The FRC noted that its review had been prompted by “recent regulatory sanctions imposed on audit firms around the world,” including the US Securities and Exchanges Commission’s (SEC’s) $100m fine against EY in June over a years’ long ethics exam cheating scandal.
In February, US and Canadian regulators also fined PwC a combined sum of £670,000 over its failure to prevent a cheating scandal involving more than 1,200 of its employees.
More recently, KPMG was fined $7.7m by America’s accounting watchdog over various offences, including the UK cheating scandal identified by the FRC, and a Colombian cheating scandal.
In its letter, the FRC said: “The importance of identifying and eradicating cheating and of holding those involved in it to account is clear. The profession therefore needs to be vigilant and to seek to continually improve the processes and controls in place in this area.”
“The profession must also strive to maintain a culture of integrity in which the highest standards of professional behaviour are upheld. The FRC will continue to act to hold firms to account for any shortcomings that might be identified.