Hundreds of staff, including senior partners and managers, in Klynveld Peat Marwick Goerdeler (KPMG)in the Netherlands, cheated on professional exams and the firm misled investigators about the misconduct.
United States audit regulator revealed the findings in the latest ethics scandal to hit a Big Four accountancy firm.
On Wednesday, the Netherlands arm of KPMG was fined $25million by the Public Company Accounting Oversight Board (PCAOB) which is the largest penalty in the US audit regulator’s history.
Also, the PCAOB imposed a $150,000 fine on KPMG Netherlands’ former audit boss Marc Hogeboom and banned him for life from working for a firm that audits US public companies.
It was gathered that investigators discovered that KPMG staff shared questions and answers to mandatory internal exams covering US auditing standards, professional ethics, and managing conflicts of interest over at least five years until 2022.
The PCAOB disclosed that the conduct reached as far as partners and senior firm leaders, including Hogeboom.
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Also, the regulator said the Dutch firm’s chief executive Stephanie Hottenhuis learned that the firm had made inaccurate submissions to PCAOB investigators but failed to inform anyone until months later.
According to Erica Williams, chair of the PCAOB, this misconduct revealed an inappropriate tone at the top and a complete failure by firm leadership to promote an ethical culture worthy of investors’ trust.
It is reported that the misconduct at KPMG Netherlands was on for years after its US arm had been fined for cheating in 2019. KPMG’s businesses in the UK and Colombia have also been sanctioned.
KPMG International Limited is a multinational professional services network, and one of the Big Four accounting organizations, along with Ernst & Young, Deloitte, and PwC.
The firm is based in Amstelveen, Netherlands, with executive offices in New York City. KPMG is a network of firms in 145 countries with 273,424 employees.
