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$950,000 fine for PwC Canada for cheating on an internal training exam

After discovering widespread cheating among employees taking internal exams, the Canadian affiliate of Big Four audit firm PwC has agreed to pay $950,000 in penalties to two audit regulators.

In addition to being fined $200,000 and censured by the Canadian Public Accountability Board, PwC Canada was fined $750,000 and censured by the Public Company Accounting Oversight Board (PCAOB) in the United States (CPAB). Both regulators praised PwC Canada for cooperating with their investigations, including self-reporting the alleged violations, in orders issued on Friday.

The specifics: According to the PCAOB's order, PwC Canada's quality controls failed to identify more than 1,200 firm professionals who were involved in improper answer sharing during online internal training exams about auditing, accounting, and professional independence from at least 2016 to early 2020. The assurance practice employed over 1,100 people, the majority of whom were junior level.

Despite the fact that PwC Canada had integrity quality controls in place, the PCAOB found that "[n]one of those policies and procedures … were designed to provide reasonable assurance that firm personnel acted with integrity when taking internal training tests." The monitoring procedures used by PwC Canada were limited to tracking course completion and related tests and were not intended to detect answer sharing.

Employees allegedly shared answers via shared drives on the company's computer network, email, and during test discussions. According to the PCAOB, the shared drives contained answers for at least 46 of the firm’s approximately 55 mandatory assurance tests, as well as answers for some mandatory firm-wide tests containing content concerning professional integrity and professional independence."

Similar allegations were made in the CPAB's order. In reaching a settlement, PwC Canada did not admit or deny the findings of the PCAOB and CPAB.

PwC Canada's response: PwC Canada's chief executive, Nicolas Marcoux, said in a statement that the firm discovered widespread cheating in early 2020. The firm "immediately opened an extensive investigation with the assistance of external resources and voluntarily disclosed this matter to the regulators," Marcoux said.

"“We have since undertaken several remediation steps including retraining, additional ethics training, financial penalties, written warnings, and terminations where warranted," Marcoux said.

According to Marcoux, PwC Canada is "confident" that exam cheating did not affect the quality of its audits.



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