KPMG hit with record fine over exam cheating scandal

KPMG has been handed a record fine after senior partners and managers were found to have cheated on professional exams.

The accounting firm’s Dutch arm was fined $25m (£20m) by the Public Company Accounting Oversight Board (PCAOB) over a cheating scandal involving hundreds of employees.

The US audit watchdog found wide- spread improper sharing had occurred in KPMG Netherlands from 2017 to 2022 and the firm had repeatedly misled investigators about the misconduct.

PCAOB said that hundreds of professionals in KPMG Netherlands improperly shared answers in mandatory firm training courses, including for US auditing standards, professional ethics and independence.

The regulator said the scandal went as high as partners and senior leaders of the firm, including Marc Hogeboom, the former head of KPMG Netherlands’ assurance practice and member of the firm’s management board.

This also included answer-sharing at a delivery centre serving KPMG’S offices in the Netherlands and the UK. The penalty is the largest fine ever handed out by the US audit watchdog.

The regulator also handed Mr Hogeboom a $150,000 fine and permanently banned him from working at a firm which audits US public companies.

KPMG Netherlands and Mr Hogeboom agreed to pay the penalties without admitting or denying the findings.

KPMG, which operates as a global network of member firms, said that employees at all levels of seniority who participated in answer-sharing have been sanctioned, with some leaving.

Stephanie Hottenhuis, the chief executive of KPMG Netherlands, said: “I deeply regret that this misconduct happened. Our clients and stakeholders deserve our apology.” She said the firm has reviewed its approach to mandatory testing and made changes.