Accounting

PCAOB fines KPMG record $25m for widespread exam cheating

Even its former head of assurance, a management board member, took part.
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Een recordboete. That’s how you say “record fine” in Dutch, and that’s what the Netherlands division of KPMG got from the Public Company Accounting Oversight Board (PCAOB), which levied a $25 million penalty over widespread exam cheating and said a cover-up went all the way to the top of the Dutch arm of the Big Four firm.

Former head of assurance Marc Hogeboom, who was on KPMG Netherlands’ management board, was one of hundreds of employees who, from 2017 to 2022, shared or received access to test answers for training courses on subjects including US auditing and professional ethics, the PCAOB said in a news release.

In case you’re wondering, the Dutch term for cheating on an ethics exam is ironie.

“Today’s orders should send a signal to firms and their leadership,” Robert Rice, the PCAOB’s head of enforcement, said in a news release. The congressionally established body has sanctioned nine firms since 2021 “for quality control deficiencies related to the inappropriate sharing of answers on exams," according to the release.

The head of KPMG Netherlands expressed remorse. “​​The conclusions are damning, and the penalty is a reflection of that,” CEO Stephanie Hottenhuis said in a statement. “I deeply regret that this misconduct happened in our firm.”

She’s headed the firm since August 2018, according to her LinkedIn profile, which states her belief in “KPMG’s purpose to INSPIRE CONFIDENCE AND EMPOWER CHANGE in our society.”

KPMG Netherlands was also busted for giving false information to PCAOB investigators. The firm said it didn’t know anyone had shared exam answers until a whistleblower report in July 2022, but members of its management and supervisory boards—who had to OK the submissions to investigators—“had themselves already engaged in answer sharing misconduct,” the news release said.

Under the settlement, KPMG Netherlands agreed to “improve its quality control policies and procedures” and report to the PCAOB how it’s complying. Hogeboom agreed to a lifetime ban on associating with registered accounting firms and a $150,000 fine. Neither he nor the firm were required to admit they did anything illegal.

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News built for finance pros

CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.