Yahoo Finance’s Jennifer Schonberger joins the Live show to discuss the SEC fining Ernst & Young $100 million over cheating on the CPA ethics exam.
BRIAN SOZZI: OK, Ernst & Young has been fined $100 million by the SEC. EY admitted that nearly 50 of its audit personnel cheated on the ethics portion of the certified public accountant exam. For more on the story, we will welcome in Yahoo Finance's Jennifer Schonberger. Jennifer.
JENNIFER SCHONBERGER: Good morning, Brian. That's right. The securities Exchange Commission slapping Big Four accounting firm Ernst & Young with a $100 million fine for cheating by its auditors on an exam required to obtain the CPA license and for hiding that from the SEC during its investigation of the firm. The accounting firm admits that over multiple years, hundreds of auditors cheated on the ethics portion of CPA exams and continuing education courses required to maintain CPA licenses.
From 2017 to 2021, nearly 50 EY auditors in multiple offices cheated on these ethics exams by using answer keys or sending colleagues answer keys, according to the SEC. EY employees cheated on these ethics exams even after being warned repeatedly not to cheat. Hundreds more of EY auditors also cheated on exams required to maintain their CPA licenses. And hundreds more helped their colleagues cheat by sharing those answer keys.
Now, EY also admits that during the SEC's investigation, that the company denied issues with cheating, even though the firm had been tipped off by lawyers about cheating on a CPA ethics exam. The accounting firm did not inform the SEC of its mistake, even though it launched its own internal investigation into cheating.
In addition to paying a $100 million penalty, the largest penalty ever imposed against an audit firm, the SEC is requiring EY to retain two separate independent consultants to review the firm's ethics policies and its failure to disclose wrongful information. Now, guys, the SEC is continuing its investigation into EY and is likely to level allegations against individuals within that accounting firm as well. Brian.