KPMG Netherlands has been hit with a $25 million fine by the Public Company Accounting Oversight Board (PCAOB) in the United States, following revelations of widespread cheating on mandatory exams and subsequent false statements to regulators in both the US and the Netherlands. The PCAOB disclosed that the firm experienced “widespread improper answer sharing” over a period of five years and repeatedly misled the oversight board about its knowledge of these activities.
Marc Hogeboom, the former head of the firm, has been fined $150,000 and received a lifetime ban from participating in any US accountancy checks that fall under PCAOB jurisdiction. PCAOB Chairwoman Erica Williams stated, “We will not tolerate cheating or any other form of unethical behavior. Such actions undermine investor confidence, which is crucial to our financial system. We are committed to enforcing strict standards of honesty and integrity.”
The cheating involved tests on a variety of critical subjects including US auditing standards, professional ethics, and independence, reaching up to the senior leadership levels, including Hogeboom himself. Although KPMG Netherlands became aware of potential cheating in June 2020, they did not conduct a significant investigation until a whistleblower came forward in July 2022.
This disclosure led to the confirmation that at least 500 KPMG employees in the Netherlands had participated in cheating on compulsory exams. Following internal investigations, the firm imposed sanctions on various employees and terminated a few.
The incident has prompted the Dutch financial regulator, AFM, to demand that all major accounting firms in the Netherlands undertake internal reviews to investigate similar misconduct. Following this, Deloitte Nederland also reported issues with answer swapping among its staff. Other firms like EY, PwC, Mazars, and BDO are currently investigating but have yet to release findings.
In response to these events, the AFM has increased its oversight of KPMG Nederland, including measures for remediation, conducting root cause analysis, and the establishment of policies to prevent such incidents in the future.
