PwC fined $10.5m over exam cheating by China and Hong Kong staff
New York | PwC has been fined $US7 million ($10.5 million) after a US regulator found more than 1000 of its audit staff in China and Hong Kong cheated on internal training exams designed to get them up to speed on US standards.
The Public Company Accounting Oversight Board said PwC staff improperly shared test answers over the course of at least two years up to 2020. Without admitting the allegations, PwC’s Hong Kong firm agreed to pay a $US4 million settlement and PwC China agreed to pay $US3 million.
The US audit watchdog has fined PwC $10.5m over exam cheating by China and Hong Kong staff. Getty
The latter is the first penalty imposed by the PCAOB on the Chinese arm of a big four accounting firm. For years, the agency was frozen out of China, but a deal between Washington and Beijing last year allowed its inspectors to examine firms there after the US threatened to delist Chinese companies from US stock exchanges if China did not come into line.
“The days of China-based firms evading accountability are over,” PCAOB chair Erica Williams said. “The PCAOB will impose tough sanctions against anyone who violates PCAOB rules and standards, no matter where they are located.”
The PCAOB said that PwC’s Chinese and Hong Kong firms had breached quality control standards by failing to detect or prevent the test cheating. Staff had used two unauthorised software applications to share answers, it said. PwC said that when it discovered the practice, it blocked the software and later reported the matter itself to the PCAOB.
‘Highly regrettable’
In a joint statement from its Hong Kong and Chinese businesses, PwC said it was “highly regrettable” that staff had shared test answers.
“We have since emphasised to all of our people our policies regarding appropriate conduct during online training courses, along with highlighting the significance of ethical and responsible use of emerging technology,” it said.
In 2021, the PCAOB fined KPMG Australia $US450,000 ($676,000) over “widespread” cheating on tests designed to ensure partners and staff act with integrity and have the relevant skills for their work.
The body found more than 1100 KPMG partners and staff “were involved in improper answer sharing when taking training tests” where they either received or shared answers between “at least 2016 to early 2020”.
The PCAOB was set up two decades ago after the collapse of Enron to oversee firms around the world that audit US-listed companies.
Ms Williams confirmed Chinese authorities were continuing to give its inspectors full access to pursue their work in the country, a determination that has lifted the delisting threat against Chinese companies.
Financial Times
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