Last week, CPA Ontario announced a settled disciplinary matter with PwC Canada, the matter being cheating and the settlement being $1.45 million CAD ($1.09 million USD) in fines for breaches of the CPA Ontario code of conduct.
Here’s what happened. 445 professional staff — 93 percent auditors and seven percent tax and advisory — participated in answer sharing during mandatory, open-book internal training assessments between 2016 and 2020. This included training on accounting and auditing standards, audit strategy, planning, procedures and documentation, professional integrity and independence matters, and specific issues that arise in audits. Despite all this widespread cheating, PwC Canada actually had a completely flawless PCAOB inspection report in 2020 [PDF] so at least some auditors over there must have known what they were doing.
Ever since KPMG was fined $50 million by the SEC for cheating in 2019 it’s been a free-for-all on the answer sharing punishments around the world. EY US got fined $100 million by the SEC for doing it in 2022 though theirs was a bit worse as they were also cheating on the ethics exams one must take to be licensed as a CPA and not just WBLs.
And just a few weeks ago, the PCAOB announced it was fining PwC China and PwC Hong Kong a total of $7 million USD for their own cheating: From 2018 until 2020, over 1,000 individuals from PwC Hong Kong, and hundreds of individuals from PwC China, engaged in improper answer sharing – by either providing or receiving access to answers through two unauthorized software applications – in connection with online tests for mandatory internal training courses related to the firms’ U.S. auditing curriculum.
When PwC Canada was fined for cheating by the PCAOB in 2022, it was revealed PwC Canada personnel maintained shared drives packed with answers to at least 46 of PwC’s audit tests. So we kinda already knew there was some cheating going on over there.
From at least 2016 to early 2020, more than 1,200 PwC Canada personnel were involved in improper answer sharing related to training tests. Firm personnel primarily shared answers through use of several shared drives that professionals had created on the Firm’s computer network (the “Shared Drives”), and on which professionals had posted the answers for others to view and provide supplemental answers. In addition, individuals shared answers by sending emails with attached documents containing answers to training test questions, by providing answers in hard copy documents, or by discussing answers when taking tests in the presence of others.
Instances of improper answer sharing primarily occurred in connection with tests that were a part of the Firm’s mandatory Assurance training. 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.
Improper sharing of training test answers occurred among junior staff, managers, directors, and partners at the Firm. After Firm leadership learned of the practice, it conducted an internal investigation. The Firm’s investigation revealed that the misconduct was widespread within the Firm’s audit practice, including among those who performed work on audits governed by PCAOB standards. At least 1,100 professionals in the Firm’s Assurance practice were involved in answer sharing.
And the CPA Ontario order says essentially the same thing:
Specifically, Answer-Sharing occurred in the following ways:
a. Repositories of Answer-Sharing Documents were created on Google Drives and generally accessible by invitation. Google Drives are electronic storage tools within the Google Workspace platform used by PwC that contain folders and documents;
b. Answer-Sharing Documents were created and shared by email documents;and
c. Professional Staff worked together at the end of in-person training sessions and referred
collectively to Answer-Sharing Documents.
The CPA Ontario order mentions that rather than seeing answer sharing as a bad thing, the attitude at PwC Canada was that answer sharing is part of a greater “collaborative culture” at the firm.
There was a consistent mindset among the participants that engaged in Answer-Sharing that it was both widely-known and appropriate. Many viewed sharing answers as part of a collaborative culture at PWC and because the assessments were open book, some did not view answer sharing as ethically improper.
That changed on November 21, 2019 when assurance staff were told via webinar to “complete assessments independently.”
The communication was motivated by the publication of press releases and news stories regarding a different firm’s manipulation of its training assessment system in another jurisdiction and was not related to any awareness by the Firm that its own Professional Staff had been actively engaging in Answer-Sharing to that point in the Relevant Period. Despite this instruction, Answer-Sharing amongst some Professional Staff continued following the webinar for over one month.
Said CPA Ontario:
PwC admits it failed to have appropriate policies and procedures and a system of quality control in place to ensure that mandatory internal training assessments were being completed independently. The firm failed to adequately communicate the requirement for independent completion and did not have appropriate procedures in place to prevent, detect or monitor for answer sharing. The mandatory assessment process was therefore not effective in demonstrating whether the substantive professional competencies being evaluated were in fact attained.
“PwC failed to create and foster a culture in which the high standards of ethics and integrity required of professional staff were conveyed and applied to internal training assessments,” said Janet Gillies, CPA, CA, executive vice-president, Regulatory and Standards, CPA Ontario. “This failure undermines the public’s confidence in the ethics and integrity of the participating staff and the profession as a whole.”
From now on, PwC Canada will engage in periodic monitoring of assessments to ensure they are completed independently. And PwC Canada’s junior auditors will learn to keep this thing everyone does on the down-low going forward.
We feel compelled to ask — does anyone other than regulators give a shit if some overworked auditors share answers on open book, checkbox assessments? Truly?