KPMG Australia paid $613K after 1,100 staff shared training test answers

The Public Company Accounting Oversight Board fined KPMG's Australian arm $613,000 after finding that from at least 2016 until early 2020 the firm violated PCAOB rules and quality-control standards on integrity and personnel management — by failing to administer and monitor its mandatory training tests, including tests designed to help audit professionals keep their accounting licences. More than 1,100 staff, including 250 auditors, shared answers to pass those courses; the PCAOB estimated about 12% of KPMG Australia's staff were involved.

The consequences inside the firm were sweeping: two partners retired over the scandal, 16 partners received formal warnings and had their income docked, and KPMG said it took disciplinary action against 1,131 people. CEO Andrew Yates called the conduct 'totally unacceptable' and admitted it 'struck at the heart of our culture'.

The penalty was cut because KPMG self-reported the misconduct to the PCAOB in February 2020, began overhauling its policies, and implemented new education programs and more prominent warnings. The board said that absent the firm's 'extraordinary cooperation', the civil money penalty 'would have been significantly larger' and additional sanctions were on the table. The fine landed amid serious concern in Australia about the audit quality and independence of the Big Four.

The cheating targeted professional-independence training — the exact safeguard meant to stop biased audits — and it ran unchecked for four years.

Twelve percent participation means answer-sharing was normalised inside parts of the firm, not a few bad actors.

Auditors passing licence-maintenance tests by copying answers put the reliability of their licences itself in doubt.

It fit a series: KPMG units in the US and Netherlands had already been fined by the PCAOB for exam cheating and data theft, and Australia's arm repeated the pattern.

Compliance culture is measured at the training quiz: if 12% of the firm cheats on integrity tests, the integrity testing is theatre.

The fine was published on 15 September 2021. KPMG Australia had already disciplined 1,131 people, retired two partners and docked the income of warned partners; the firm kept its PCAOB work after cooperation, and added training and warnings to stop a repeat.