The Public Company Accounting Oversight Board today sanctioned three Dutch member firms of Deloitte, PricewaterhouseCoopers and EY after finding widespread exam misconduct.
The PCAOB found that from 2018 to 2022, Deloitte Netherlands, PwC Netherlands and EY Netherlands failed to prevent or detect hundreds of the firms' professionals — including partners — participating in extensive answer sharing on mandatory internal training tests. The board imposed fines on all three firms totaling $8.5 million.
"The PCAOB will not allow impaired ethics to threaten the integrity of our capital markets," PCAOB Chair Erica Williams said in a statement. "I thank the Dutch Authority for the Financial Markets for its cooperation in the investigations of these matters and applaud the intensive supervision measures it has taken to hold these firms accountable going forward."
The board and the Dutch Authority for the Financial Markets conducted parallel investigations. The AFM separately imposed supervision measures aimed at preventing recurrences.
"As we have stated previously, investors must be able to trust that all audit professionals are acting with integrity, and few things damage trust like impaired ethics," Robert Rice, the director of the PCAOB's Division of Enforcement and Investigations, said in a statement. "Our investigations of these three firms revealed that their quality control systems failed to evaluate appropriately and monitor the risk of improper answer sharing among their personnel, including after the firms learned of extensive answer sharing in at least one other major audit firm. We remain committed to our statutory mission of protecting investors and improving audit quality, and we will hold firms accountable when they fail to comply with PCAOB quality control standards."
Without admitting or denying the findings, each of the three firms consented to the PCAOB's respective orders. Deloitte Netherlands and PwC Netherlands each agreed to pay a $3 million civil money penalty, and EY Netherlands agreed to pay a $2.5 million penalty. Each firm was censured and agreed to review and improve their quality control and to provide assurance that their respective personnel act with integrity regarding training, and to report their compliance to the PCAOB.
All three firms received "substantial credit for extraordinary cooperation" during the investigations, according to the board. Without such cooperation, the civil penalties would have been significantly larger, and the PCAOB might have imposed additional sanctions.
