U.S. regulator asks Dutch accountants to do extra investigation into exam fraud

The Public Company Accounting Oversight Board (PCAOB), the American regulator of accountants, has asked several Dutch accountancy firms to do an extra investigation into exam fraud among their employees. The six largest accountancy firms were already investigating the period 2017-2022, but the Americans want them to also include 2023, sources told Financieele Dagblad.

KPMG announced at the end of 2022 that it was investigating signals of exam fraud among its employees. Deloitte, EY, PwC, Mazars, and BDO quickly followed suit at the instigation of the Netherlands Authority on Financial Markets (AFM). According to FD, the fraud would mainly consist of accountants sharing answers to multiple-choice tests. Accountants must take these tests to meet their mandatory training requirements or continuing education requirements.

In July 2023, KPMG announced that over 500 of its employees had committed fraud and that some had been fired. According to FD, the responsible director, Marc Hogeboom, and chairman of the supervisory board, Roger van Boxtel, resigned from KPMG as a result. Deloitte also lost director Rob Bergmans over the interim findings of its investigation, which is still ongoing. The other offices haven’t shared their findings yet.

The investigations initially covered 2017 to 2022. PCAOB, together with the AFM, has now requested various Dutch offices to also investigate fraud in 2023, sources told FD. It is the first time the American authority is actively involving itself in the Dutch fraud file, though the AFM previously indicated that it was working with its American partner on this case. According to the newspaper, the Dutch offices may face fines from the United States.

The PCAOB, AFM, and the six large accountancy firms all declined to comment while the investigations are ongoing.

The American watchdog can interfere with the Dutch firms due to the high requirements that apply to accountants in the U.S., according to FD. Every accountant who audits an American company, a company listed in the U.S., or one of its subsidiaries - foreign or otherwise - must comply with the American supervisory rules. This extraterritorial authority has previously resulted in multi-million fines for accountancy firms in Australia, the United Kingdom, China, and Hong Kong.