Accountancy office KPMG Netherlands agrees to $25 million settlement with US regulator

The KPMG Netherlands accounting office has agreed to a settlement with American regulator PCAOB (Public Company Accounting Oversight Board) regarding the findings of an investigation into sharing answers in exams for mandatory employee training. The office will pay a fine of 25 million dollars. The company's fine is the biggest monetary penalty in the PCAOB's history.

The investigation's results showed that over 500 people were involved in cheating on the exams from October 2017, for example, by exchanging questions and answers with each other. The regulator was particularly displeased that the cheating continued for years at KPMG without any action being taken to stop it.

The Authority for the Financial Markets (AFM) in the Netherlands, which also participated in the investigation into KPMG, claims that KPMG partners and the head of the accountancy branch were also involved in the exam fraud. "There was a culture in which exam fraud could happen and go unspotted for a long time," the Dutch regulator said.

"The core of the accountancy profession is the trust entrusted in them. The exam fraud has damaged this."

The sector has had several scandalous incidents over the last few years. The AFM asked all accountancy offices in the Netherlands to conduct an internal investigation into exam fraud over a year ago. Investigations at other organizations, including Deloitte, are still ongoing.

KPMG took action last year after the first findings of the investigation were announced. The director involved, Marc Hogeboom, and the chair of the board of directors, Roger van Boxtel, stepped down from their positions due to the findings. Van Boxtel admitted that he also completed a voluntary training course in an incorrect manner.

Hogeboom was also handed a personal fine of 150,000 dollars and has been banned from working in a position which falls under the supervision of the American regulator. No other individuals were punished by the regulator.

"The conclusions are shameful, and therefore, the fine is large. I am very sorry that this wrongful behavior has occurred," KPMG Netherlands CEO Stephanie Hottenhuis said. Employees were also given sanction measures inside the organization; some were forced to leave the company.

The AFM will not issue another sanction against KPMG. The reason was that the United States had a stronger legal position to be able to punish KPMG.