PwC agrees to pay $1.45-million to settle with Ontario accounting regulator over exam cheating

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PricewaterhouseCoopers LLC has agreed to pay $1.45-million to settle charges brought by CPA Ontario that its employees cheated on internal training programs for nearly 3½ years.

CPA Ontario, the provincial regulator of chartered professional accountants and firms, said in a settlement agreement released Wednesday that from June, 2016, to early 2020, PwC staff, mostly auditors, improperly created, shared and viewed answers when completing mandatory internal training programs.

Senior management at PwC became aware of the “answer-sharing” issues in January, 2020, launched an internal investigation and notified CPA Ontario in April, 2020, the regulator said. CPA Ontario then conducted its own investigation before getting PwC to admit it breached the Ontario code for accountants. PwC agreed with the facts and conclusions in the CPA Ontario settlement “for the purpose of this proceeding only,” their agreement said.

The training included technical instruction in auditing practices as well as the ethical responsibilities of the Ontario code for accountants. It’s part of the firm’s quality control system, CPA Ontario said.

“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 Ontario’s executive vice-president, regulatory and standards in a statement announcing the enforcement action. “This failure undermines the public’s confidence in the ethics and integrity of the participating staff and the profession as a whole.”

PwC will pay a fine of $1-million and costs of $450,000 to CPA Ontario.

Anuja Kale-Agarwal, PwC Canada’s national director of communications, released a statement from the firm that noted this matter is the same issue covered by previous regulatory settlements and “to be clear, sharing of answers is completely unacceptable – it doesn’t represent PwC’s values or expectations, and it’s not in accordance with our code of ethics.”

She said PwC Canada “remains confident there is no evidence suggesting that this matter has affected the quality of PwC’s audits.”

PwC reached a similar settlement in February, 2022, with the Canadian Public Accountability Board, which inspects the firms that audit public companies. The board, which cannot assess fines for economic damages or punitive reasons, charged PwC $200,000 to cover its costs.

The United States Public Company Accounting Oversight Board also settled with PwC in February, 2022, over the same matter, fining it US$750,000.

CPA Ontario said the lag in its enforcement action comes from completing its own investigation and then negotiating an admissions-based settlement agreement, as opposed to one where the company neither admits nor denies wrongdoing.

The regulator said PwC did not have appropriate policies and procedures to prevent, detect or monitor for answer-sharing, or to tell its professional staff it was required to complete all mandatory internal training assessments independently.

PwC staff created repositories of answer-sharing documents on Google Drives, accessible by invitation and by e-mail, CPA Ontario said. Staff also worked together, using answer-sharing documents, at the end of in-person training sessions.

“There was a consistent mindset among the participants that engaged in answer-sharing that it was both widely known and appropriate,” CPA Ontario said in the settlement agreement. “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.”

PwC’s internal investigation identified that 445 individual CPA Ontario members and students in all of PwC’s Ontario offices engaged in answer-sharing activity to some extent, CPA Ontario said. A majority – 292 – were based in Toronto. PwC identified that 423 of the 445 were associates or senior associates – a majority of the firm’s 811 associates and senior associates in Ontario as of May 31, 2019.

The firm identified 16 managers or senior managers, two directors and four partners as having some involvement with answer-sharing activity.

CPA Ontario said PwC took disciplinary measures that included termination of employment, financial penalties, having to retake assessments and placement of letters in personnel file.

CPA Ontario said the settlement agreement relates only to CPA Ontario members and students employed at PwC, but not to any others outside of Ontario.

The Canadian Public Accountability Board said in its 2022 settlement agreement that more than 1,200 PwC professionals across Canada shared answers – leaving more than 700 PwC employees in other provinces uncovered by the settlement.