KPMG, one of the world’s largest audit and tax services companies, is facing a record $25 million fine after it was discovered that several professionals at the firm had cheated during internal exams. The U.S. audit regulator, Public Company Accounting Oversight Board (PCAOB), imposed the fine and found that over 500 people, including senior-level employees, were involved in the fraudulent practices.
According to the PCAOB, professionals at KPMG Netherlands engaged in improper answer sharing during tests conducted for the firm’s mandatory training courses from 2017 to 2022. The cheating scandal also involved partners and senior firm leaders, including Marc Hogeboom, who was the Head of Assurance and a member of the management board at the time.
The PCAOB stated that the growth of this widespread answer sharing was enabled by the firm’s failure to monitor, investigate, and identify potential misconduct. As a result, KPMG agreed to pay a $25 million civil money penalty, the largest fine ever imposed by the PCAOB. The company also agreed to review and improve its quality control policies to ensure that its personnel act with integrity.
Mr. Hogeboom was permanently barred from being associated with a registered public accounting firm and agreed to pay $150,000 in fines. However, neither KPMG nor Mr. Hogeboom admitted or denied the findings made by the audit regulator.
PCAOB Chair Erica Y. Williams emphasized that cheating and unethical behavior will not be tolerated. She stated that impaired ethics threaten investor confidence, and the PCAOB will take action to hold firms accountable when they fail to enforce a culture of honesty and integrity.
The PCAOB also revealed that KPMG was aware of answer-sharing practices as early as June 2020 but took virtually no steps to investigate until a whistleblower reported the misconduct in July 2022. Furthermore, KPMG made multiple inaccurate representations during the investigation, which the PCAOB dismissed as false.
KPMG responded to the PCAOB action by acknowledging that over 500 people at the firm were involved in some form of improper conduct, including sending or receiving answers to training tests. The company stated that it had sanctioned individuals at all levels of seniority who took part in answer-sharing and implemented several remedial measures. KPMG is also working to improve its policies and procedures related to mandatory training and internal culture.
Stephanie Hottenhuis, CEO of KPMG Netherlands, expressed regret over the misconduct and offered apologies to clients and stakeholders. She emphasized that the company’s clients and stakeholders deserve quality and integrity, which are essential for KPMG’s role in society.
This is not the first time KPMG has faced fines from the PCAOB. In December 2022, the regulator imposed fines on three KPMG affiliates located in India, Colombia, and the United Kingdom for violating auditing standards and ethical regulations. In 2019, the U.S. Securities and Exchange Commission (SEC) also charged KPMG $50 million in fines for cheating on training exams and illicit use of PCAOB data.
In addition to KPMG, the PCAOB fined Deloitte branches in the Philippines and Indonesia $1 million each for exam cheating incidents. PCAOB Chair Erica Y. Williams highlighted that the board is committed to strengthening enforcement and has already imposed $34 million in penalties this year alone.
The recent fine imposed on KPMG serves as a clear warning to those who break the rules. The PCAOB is determined to hold firms accountable and protect investors from unethical behavior.
 and KPMG's response to improve their policies and procedures.){kind=link}