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News » KPMG Netherlands fined $25M for auditors cheating on exams

KPMG Netherlands fined $25M for auditors cheating on exams

KPMG Netherlands fined for cheating
Photo from City A.M.

AMSTELVEEN, NETHERLANDS — KPMG Accountants NV, the Dutch arm of global audit giant KPMG, was recently fined $25 million by the Public Company Accounting Oversight Board (PCAOB) of the United States for failing to prevent its auditors from cheating on professional exams. 

The fine mirrors a troubling pattern of behavior that aligns with similar misconduct by KPMG’s U.S. subsidiary, which settled cheating charges in 2019 for double the amount.

The PCAOB’s censure highlights a period from October 2017 through December 2022 during which KPMG Netherlands exhibited “quality control failures.” 

These lapses allowed for “improper answer sharing” among hundreds of its professionals concerning mandatory internal training tests. Such actions directly contravene the Board’s rules aimed at upholding the integrity of the accounting profession.

The oversight body detailed how KPMG personnel exploited various methods to circulate test answers, including email exchanges and collective test-taking sessions. This misconduct predominantly involved employees within the firm’s Assurance practice, raising serious questions about the reliability of its audit services.

Despite KPMG’s global revenues hitting $36 billion last year, the fine represents a mere fraction of its annual earnings. However, the reputational damage and the call for “remedial action” to safeguard public interest and investor confidence could have far-reaching implications.

The Dutch Authority for the Financial Markets (AFM) has also taken action, placing KPMG Netherlands under “enhanced supervision.” This measure aims to enforce stringent remedial, analytical, and procedural reforms to avert future ethical breaches.

At the heart of the scandal are senior figures within the firm, including Marc Hogeboom, former head of assurance and member of the Management Board, and a former chairman of the Supervisory Board. 

Both have been implicated in the answer-sharing scheme, with Hogeboom facing a separate censure, a $150,000 fine, and a prohibition from associating with any registered public accounting firm.

In response to the PCAOB’s findings, KPMG Netherlands CEO Stephanie Hottenhuis expressed deep regret over the misconduct. 

“The conclusions are damning, and the penalty is a reflection of that,” she stated, emphasizing the firm’s commitment to learning from this episode and ensuring accountability at all levels of the organization.

Read more here.

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