MARKET NEWS

The fine on the auditing firm’s Netherlands unit is the largest ever from the Public Company Accounting Oversight Board

KPMG’s Netherlands unit agreed to pay a $25 million fine over claims of exam cheating and misinforming investigators, the largest monetary penalty imposed on an auditing firm by the Public Company Accounting Oversight Board. 

The U.S. audit regulator on Wednesday said the KPMG member firm, KPMG Accountants NV, violated its quality control rules relating to the firm’s internal training program and monitoring of its system of quality control. 

The firm engaged in widespread answer sharing from 2017 to 2022 and involved hundreds of professionals, including partners and senior firm leaders such as now-former head of assurance, Marc Hogeboom, the PCAOB said. The firm repeatedly misrepresented its knowledge of the misconduct to the PCAOB, the regulator said. Hogeboom agreed to pay $150,000 and is permanently barred from associating with a registered accounting firm. Neither KPMG nor Hogeboom admitted or denied the PCAOB’s claims. 

The $25 million fine far eclipsed the previous largest PCAOB penalty against an auditing firm, an $8 million levy against Deloitte’s Brazil unit in 2016 for alleged wrongdoing including issuing false audit reports and attempting to cover up audit violations.

KPMG Netherlands has reviewed its approach to mandatory testing, made “meaningful” changes to its learning and development programs and implemented controls to monitor whether training tests are being completed appropriately, said Stephanie Hottenhuis, chief executive of KPMG Netherlands. “The conclusions are damning, and the penalty is a reflection of that,” she said. “I deeply regret that this misconduct happened in our firm.” 

Hogeboom didn’t immediately respond to a request for comment.