KPMG's Dutch subsidiary hit with record £20 million fine for exam cheating
KPMG's faces record fine for a widespread exam cheating scandal, implicating senior staff and highlighting systemic ethical issues in the professional services industry.
KPMG Accountants NV, the Netherlands-based subsidiary of the global accounting giant, has been slapped with a staggering $25 million (£20.04 million) fine by the Public Company Accounting Oversight Board (PCAOB).
This penalty, the largest in the history of the US audit regulator, comes as a result of the firm’s failure to prevent widespread cheating on professional exams by its staff, including senior partners and managers.
The PCAOB’s investigation uncovered that from 2017 to 2022, hundreds of KPMG Netherlands personnel engaged in improper sharing of answers for mandatory internal exams. These exams, crucial for maintaining professional accounting certification, cover vital areas such as US auditing standards, professional ethics, and managing conflicts of interest.
The misconduct reached the upper echelons of the firm, implicating senior leaders including Marc Hogeboom, the former head of assurance, who has been fined $150,000 and received a lifetime ban from working for a firm that audits US public companies.
This scandal not only tarnishes KPMG’s reputation but also casts a long shadow over the professional services industry at large. The PCAOB’s findings highlight a disturbing trend of ethical lapses within the sector, raising serious questions about the integrity of the auditing and accounting practices.
The fact that this misconduct persisted even after KPMG’s US arm was fined for similar offences in 2019 suggests a systemic issue that goes beyond national borders.
The PCAOB and the Dutch Authority for the Financial Markets (AFM) have placed KPMG Netherlands under “enhanced supervision,” demanding comprehensive remedial actions to prevent future ethical breaches. This includes the implementation of stricter controls and monitoring mechanisms to ensure compliance with professional standards.
A Wake-Up Call
The KPMG exam cheating scandal serves as a stark reminder of the importance of ethical conduct and integrity in the professional services industry. It underscores the need for firms to foster a culture of honesty and accountability, where unethical behaviour is not only discouraged but actively prevented.
As the industry moves forward, it will be imperative for all firms to take a hard look at their internal controls and training programs to safeguard against similar lapses in the future.
