US audit watchdogs inspected and caught hundreds of KPMG employees cheating in their training tests in the UK and Columbia. The conduct continued even after a similar scandal which was caught and a fine was imposed in the US.
Highlights
- KPMG India was fined $1mn.
- Smaller fines on individuals take the amount to $7mn.
- KPMG Columbia, India, and the UK said they have taken necessary actions to strengthen compliance, training, and quality control.
The misconduct comes under the violation of professional auditing standards, quality control standards, and rules framed under PCAOB.
In a wide-ranging series of fraudulent activities like backdating audit work and sharing of answers in internal training exams, charges on KPMG were severe representing heightened misconduct by the firm.
KPMG has agreed to pay a fine of $7.7mn. KPMG’s Colombia, UK, and India offices said they had taken action to strengthen compliance, training, and quality control.
The oversight board alleges that the cheating continued from at least 2018 to March 2021 and it involved direct employees and staff at an Indian joint venture that does audit-related tasks for a UK firm.
In professional tests, answers were shared through emails for the training test questions. PCAOB said KPMG UK allegedly failed to prevent or detect extensive answer sharing by the employees of their mandatory training tests.
The firm failed to reasonably supervise its training tests leading to such catastrophic misconduct.
