The Dutch arm of KPMG is facing severe repercussions after it was revealed that hundreds of its staff, including senior partners and managers, engaged in cheating on professional exams. According to the US audit regulator, the Public Company Accounting Oversight Board (PCAOB), KPMG's Netherlands business misled investigators about the extent of the misconduct.
As a result of this unethical behavior, the PCAOB has imposed a record-setting fine of $25 million on KPMG's Dutch arm. Additionally, the former audit boss, Marc Hogeboom, has been fined $150,000 and banned for life from working for any firm that audits US public companies.
The investigation uncovered a systemic cheating scheme that spanned over five years, involving the sharing of questions and answers to mandatory internal exams covering various aspects of auditing standards and professional ethics. Shockingly, this misconduct reached the highest levels of the firm, including partners and senior leaders like Hogeboom.
Stephanie Hottenhuis, the chief executive of KPMG Netherlands, was found to have been aware of inaccurate submissions to PCAOB investigators but failed to disclose this information promptly.
The PCAOB's chair, Erica Williams, condemned the firm's leadership for fostering an inappropriate culture that eroded investor trust. This scandal adds to a string of ethics violations plaguing Big Four accounting firms, highlighting a systemic issue that extends beyond KPMG.
In response to the findings, KPMG Netherlands has taken disciplinary actions against implicated staff and partners, implementing stricter controls to prevent future misconduct. However, the severity of the penalty reflects the gravity of the situation, with Hottenhuis expressing deep regret for the firm's actions and pledging to regain the trust of clients and stakeholders.
