The UK Financial Reporting Council (FRC) is increasing scrutiny on big audit firms and what they are doing to prevent cheating after the U.S. Securities and Exchange Commission (SEC) handed Ernst & Young (EY) a $100 million fine in June. The SEC found systematic cheating among the firm’s accounting professionals on the ethics section of Certified Public Accountant (CPA) license exams over a period of four years.
“The FRC is deeply concerned about these events and the potential impact on U.K. audit firms,” Sarah Rapson, the FRC’s executive director for supervision, said in a recent letter sent to the UK’s audit firms. The misconduct at EY has “clear implications” for compliance with professional standards that call on audit firms and professionals to act with integrity, Rapson added. FRC supervisors are in talks with audit firms in regards to their controls for preventing test cheating in the future.
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