AUSTIN (KXAN) — The Texas State Board of Public Accountancy (TSBPA) issued a $3 million fine and reprimand Thursday against an international accounting firm, according to a Friday press release from the board.
“The action represents the Board’s message to all Texas licensees that the Board will not tolerate any form of professional misconduct,” said TSBPA executive director William Treacy.
The fine, brought against London-based firm Ernst & Young LLP (EY), comes after a 2022 announcement by the U.S. Securities and Exchange Commission (SEC) that it had uncovered cheating on required ethics exams by “a significant number of EY audit professionals.”
“It’s simply outrageous that the very professionals responsible for catching cheating by clients cheated on ethics exams of all things,” said Gurbir S. Grewal, the SEC’s Enforcement Division director, in 2022. “This action should serve as a clear message that the SEC will not tolerate integrity failures by independent auditors who choose the easier wrong over the harder right.”
TSBPA’s release said that its fine for EY was the largest penalty “ever assessed against a CPA [Certified Public Accountant] firm.” According to the TSBPA, the SEC’s findings include Texas CPAs who cheated on the state’s required ethics exams in order to maintain their CPA licenses.
In a statement to KXAN on Friday, EY said that “nothing is more important than our integrity and our ethics.”
In June 2022, EY reached a settlement with the US Securities and Exchange Commission over charges related to the Firm’s Continuing Professional Education programs. The Stipulated Settlement announced earlier today by the Texas State Board of Public Accountancy stems directly from that prior issue. We have repeatedly and consistently taken steps to reinforce our culture of compliance, ethics, and integrity in the past, and will continue to take extensive actions that will further strengthen our commitment in the future.
At EY, nothing is more important than our integrity and our ethics. These core values are at the forefront of everything we do.Ernst & Young LLP
The 2022 SEC order also noted that EY admitted to hindering the agency’s investigation by making materially misleading submissions.