In an agreed consent order, the Texas State Board of Accountancy has reprimanded Ernst & Young and levied a $3 million administrative penalty against the Big Four firm.
The penalty — the largest the board has ever assessed against a CPA firm — stems from a scandal that surfaced in mid-2022 when the Securities and Exchange Commission revealed that almost 50 EY audit employees had improperly shared answer keys to the ethics portion of the CPA exam between 2017 and 2021, and that hundreds more cheated on continuing professional education courses (see our story).
A number of those employees were licensed in Texas.
“The action represents the board’s message to all Texas licensees that the board will not tolerate any form of professional misconduct,” said TSBPA executive director William Treacy, in a statement.
“In June 2022, EY reached a settlement with the U.S. Securities and Exchange Commission over charges related to the firm’s continuing professional education programs,” an EY spokesperson said in a statement shared with Accounting Today. “The stipulated settlement announced earlier today by the Texas State Board of Public Accountancy stems directly from that prior issue. We have repeatedly and consistently taken steps to reinforce our culture of compliance, ethics, and integrity in the past, and will continue to take extensive actions that will further strengthen our commitment in the future. ”
“At EY, nothing is more important than our integrity and our ethics,” the statement concluded. “These core values are at the forefront of everything we do.”
In 2022, the firm paid a $100 million fine to the SEC over the charges. That represented the commission’s largest-ever fine at the time; it said that many EY employees knew that their behavior violated the company’s code of conduct, but some still did it because they couldn’t pass on their own. The firm ultimately disciplined and, in some cases, fired individuals for their actions, according to the SEC.
“Sharing answers on any assessment or exam is a violation of our Code of Conduct and is not tolerated at EY,” said a statement from the firm at the time. “Our response to this unacceptable past behavior has been thorough, extensive, and effective.”
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