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The Australian arm of one of the world’s biggest and most prestigious accounting firms, KPMG, has been fined $613,000 by the US accounting watchdog, after a review found widespread cheating by staff on training tests over a four-year period.
In a decision published overnight, the Public Company Accounting Oversight Board (PCAOB) revealed that more than 1,100 staff –including 250 auditors –at KPMG’s Australian offices shared answers to pass mandatory training courses on professional independence, auditing and accounting, including tests to maintain accounting licences.
KPMG avoided larger sanctions from the US accounting watchdog due to its cooperation. Credit:Getty
“From at least 2016 until early 2020, KPMG Australia violated PCAOB rules and quality control standards related to integrity and personnel management by failing to establish appropriate policies and procedures for administering and monitoring training tests, including tests designed to help the firm’s audit professionals satisfy the requirements for maintaining their accounting licenses,” the PCAOB ruling says.
All up, PCAOB estimates about 12 per cent of KPMG’s Australian staff members were involved in sharing answers to help colleagues pass the tests.
Two partners have retired from the firm following the cheating scandal, while formal warnings were issued to another 16 partners over their involvement in the answer sharing. Those partners also had their income docked.
The fine comes amid serious concerns about the quality of Australian auditing standards and the independence of the “Big 4” accounting groups, which includes KPMG.
KPMG self-reported the training-related misconduct to the PCAOB in February 2020 and began overhauling its policies and procedures.
KPMG said in a statement that it had taken disciplinary action against 1,131 people relating (to) testing-related misconduct, including verbal or written cautions and written warnings being communicated to the majority of individuals who were involved. The firm has also confirmed warnings plus remuneration consequences on 46 people.
KPMG Australia CEO, Andrew Yates said it was important to reinforce to the firm’s partners and people that the conduct was “totally unacceptable”.