FRC finds 'instances of cheating' in accounting exams

28 December 2022 2 min. read
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The British wings of some of the world’s largest professional services firms are set to be embroiled in a global exam-cheating scandal. Reports in the press suggest the audit market watchdog has found examples of professionals “cheating” in chartered exams.

The Financial Reporting Council (FRC) is the regulator of the UK’s accounting market. As reported in the Financial Times, the ombudsman has recently discovered examples of exam-cheating at audit firms – having been prompted to dig deeper by similar scandals in the US, Canada and Australia.

Sarah Rapson, Executive Director of Supervision at the FRC, noted, “We take just as dim a view of cheating in internal tests as we would in external tests because it goes to behaviour and integrity and ethics, frankly,” she said. “The profession should be a trusted profession and both types of cheating serve to undermine that position.”

FRC finds 'instances of cheating' in accounting exams

Among examples of misconduct since uncovered by the FRC, through its review in July of controls to stop cheating, were several "instances of cheating" in exams for professional qualifications. The FRC holds powers to fine both audit firms, individual professionals, and industry bodies – and it has been suggested that it may therefore mete out hefty punishments for its charges.

The instances are said to have included some cases already acted upon by the FRC's US equivalent, the PCAOB, which sanctioned KPMG in September 2021. However, it is likely some of the accounting industries other top names may also be pulled into the case – with the FRC having KPMG alongside fellow Big Four auditors EY, Deloitte and PwC. The FRC also examined the Big Four’s largest challengers BDOMazars and Grant Thornton, and six professional bodies with a role in granting qualifications.

Two of those other firms have previously been sanctioned in other territories already. In June 2022, EY was sanctioned by the PCAOB, while PwC was also sanctioned by Canada’s equivalent body, in February.

A statement from the FRC explained, "The issues raised by exam cheating therefore remain live and the FRC’s consideration of them, and any further regulatory action needed in response to them, is ongoing… The FRC will continue to act to hold firms to account for any shortcomings that might be identified.”

By the watchdog’s reckoning, improvements are needed to how exams and course work are assessed and invigilated, to prevent further occurrences. A number of the cheating instances related to projects which apprenticeship accountants must submit to professional bodies, alongside their professional qualification. On this front, the FRC stated that it was looking at how to strengthen the "integrity" of assessing these projects to prevent and detect cheating. However, it added that the instances of cheating do not seem to point to "systemic" cheating.