The PCAOB announced today that they’ve hand-slapped PwC Israel — technically Kesselman & Kesselman C.P.A.s — because hundreds of staff there were sharing answers on mandatory internal training courses from 2017-2022. Shock. It’s almost as if this happens everywhere because ain’t nobody got time for that. PwC Israel is the 10th firm to get sanctioned by the PCAOB for answer-sharing since 2021, a fact they were sure to brag about in the press release.
“The PCAOB will not tolerate cheating or other unethical behavior at PCAOB-registered audit firms, regardless of whether the firm is located in the United States or abroad,” said PCAOB Chair Erica Y. Williams. “We will hold firms accountable when they put investors at risk by failing to comply with the PCAOB’s quality control standards.”
“Integrity is fundamental to effective auditing,” said Robert E. Rice, Director of the PCAOB’s Division of Enforcement and Investigations. “Investors must be able to trust that auditors will act with integrity when performing their professional duties.”
Alright, Bob, let’s entertain that statement for a moment. You used the words “effective auditing.” Just how effective is PwC Israel’s auditing according to the PCAOB’s own inspection standards?
So a perfect PCAOB inspection score at the time this answer sharing was taking place. Sounds familiar.
From 2016 to early 2020, more than 1,200 PwC Canada personnel were sharing answers on internal trainings using invite-only Google Drive folders which is pretty clever and demonstrates a commitment to streamlining tedious work that they can’t bill for. Many of the Canadian answer-sharers — predominantly auditors — viewed sharing answers as part of a collaborative culture at PwC, and believed that because the training was open book anyway it didn’t matter if they helped each other out with answers. The PCAOB fined them $750,000 in 2022 for improper quality control standards that allowed this to go on not only under the noses of managers and partners but with their full knowledge and participation. Meanwhile, PwC Canada had an absolutely flawless PCAOB inspection in 2020.
PwC Israel was well aware of the cheating situation in America’s hat as we learn in the PCAOB’s order today:
From 2017 to 2022, PwC Israel had in place certain quality control policies and procedures intended to address integrity and personnel management. The Firm’s Code of Conduct required that Firm personnel act with integrity generally, but had no specific
prohibition against answer sharing on training tests. The Firm separately communicated specific warnings against improper answer sharing on training tests, but those communications were either limited in distribution or quite recent. For example, in June 2019, the Firm sent a communication only to all of the Firm’s assurance partners, bringing to their attention a recent fine imposed on a U.S. accounting firm due, in part, to answer sharing on internal training exams, and warning against such activity. Nearly three years later, in April 2022, the Firm sent a communication to all Firm personnel, bringing to their attention another fine imposed on another PwC Global network firm due to answer sharing on internal training exams.
The PCAOB reached out to PwC Israel in the late summer of 2022 with an information request “inquiring about, among other things, any occurrences of improper answer sharing at the Firm.” It’s unclear from the PCAOB order if the firm responded to that request but it doesn’t matter because someone at the firm reported answer sharing to high ups at the firm in October of that year at which point the PCAOB started an investigation.
Without admitting or denying the PCAOB’s findings, PwC Israel will be paying a $2.75 million fine and engaging in even more tedious busywork to ensure this doesn’t happen again.
Related:
PCAOB Sanctions PwC Israel for Quality Control Violations Related to Widespread Improper Answer Sharing [PCAOB]
Amazing. The first thing I looked at when I became aware of the latest PCAOB make work action was PWC Israel’s last inspection report. You beat me to it.
This shows the PCAOB has nothing important to do.
At what point do the firms just stop offering CPE to their employees? Still have to do the training, but no exam, so no CPE. No exam = no potential for cheating. Go get your own damn CPE and cheat on your own time
That is a good thought. The firms should let the employees buy outside CPE, then reimburse the employees upon successful completion.
Won’t happen; accounting firms, specially big 4, need to brain wash the kiddos so they can do monkey dance. If they send them out for CPE, then they can’t control them.
The whole “cheating” thing is so silly. The trainings that are actually important to knowing how to audit are usually live, either in-person or webinar. And for those there isn’t a test. You just have to be present.