PCAOB Imposes Record $25 Million Fine on KPMG Netherlands and Bars a Firm Leader After Exam Cheating, Misinforming Investigators

Firm’s former Head of Assurance directly and substantially contributed to the violations

Washington, DC, Apr. 10, 2024

The Public Company Accounting Oversight Board (PCAOB) today announced two settled disciplinary orders sanctioning KPMG Accountants N.V. (“KPMG Netherlands”), and its former Head of Assurance, Marc Hogeboom (“Hogeboom”), for violations of PCAOB rules and quality control standards relating to the firm’s internal training program and monitoring of its system of quality control. The PCAOB found that widespread improper answer sharing occurred at the firm over a five-year period and that the firm made multiple misrepresentations to the PCAOB about its knowledge of the misconduct.

The sanctions imposed include a $25 million civil money penalty on KPMG Netherlands – the largest fine the PCAOB has ever imposed – and a permanent bar and $150,000 civil money penalty on Hogeboom.

The PCAOB and the Dutch Authority for the Financial Markets (AFM) conducted parallel investigations, and the AFM has separately imposed enhanced supervision measures under Dutch law aimed at preventing recurrences.

Since 2021, the PCAOB has sanctioned nine registered firms for quality control deficiencies related to the inappropriate sharing of answers on internal training exams.

The PCAOB will not tolerate cheating nor any other unethical behavior, period,” said PCAOB Chair Erica Y. Williams. “Impaired ethics threaten the investor confidence our system relies on, and the PCAOB will take action to hold firms accountable when they fail to enforce a culture of honesty and integrity. I thank the Dutch Authority for the Financial Markets for its cooperation in the investigation of this matter and applaud the enhanced supervision measures it has taken to hold the firm accountable going forward.”

As described in the PCAOB’s orders, from 2017 to 2022, hundreds of professionals at KPMG Netherlands engaged in improper answer sharing – either by providing access to test questions or answers, or by receiving such access without reporting it – in connection with tests for mandatory firm training courses. These courses related to a variety of topics, including U.S. auditing standards, professional ethics, and independence. The improper answer sharing reached as far as partners and senior firm leaders, including Hogeboom (at the time the firm’s Head of Assurance and a member of the firm’s Management Board). The growth of this widespread answer sharing was enabled by the firm’s failure to take appropriate steps to monitor, investigate, and identify the potential misconduct. For example, starting in June 2020, the firm was aware that (1) answer sharing had occurred at a KPMG service delivery center serving KPMG Netherlands and KPMG LLP (United Kingdom) and (2) the sharing had extended to the U.K. firm’s personnel. Nevertheless, KPMG Netherlands took virtually no steps to investigate potential answer sharing among its personnel until a whistleblower reported such misconduct in July 2022.

During the PCAOB’s investigation, the firm submitted – and failed to correct – multiple inaccurate representations to the PCAOB. In the submissions, the firm claimed that it had no knowledge of answer sharing by its personnel until it received the July 2022 whistleblower report. These submissions, reviewed by the firm’s Management Board and Supervisory Board, were false because members of those two Boards had themselves already engaged in answer sharing misconduct before July 2022. 

The above misconduct revealed an inappropriate tone at the top of KPMG Netherlands and a failure by firm leadership to effectively promote an ethical culture among firm personnel with respect to improper answer sharing and monitoring of the firm’s system of quality control.

“Today’s orders should send a signal to firms and their leadership that they have a responsibility to set an appropriate tone at the top, particularly with regard to issues of integrity and personnel management,” said Robert E. Rice, Director of the PCAOB’s Division of Enforcement and Investigations.

Without admitting or denying the findings, the firm and Hogeboom consented to the PCAOB’s respective orders against them. KPMG Netherlands was censured and agreed to pay a $25 million civil money penalty. The firm also agreed to review and improve its quality control policies and procedures to provide reasonable assurance that its personnel act with integrity in connection with internal training, and to report its compliance to the PCAOB. Hogeboom was censured, permanently barred from being an associated person of a registered public accounting firm, and agreed to pay a $150,000 civil money penalty.

PCAOB enforcement staff members David Florenzo, Thomas McCann, Elliott C. Mogul, and David Eccard conducted the investigation, supervised by William Ryan and John Abell.

The PCAOB thanks the Dutch Authority for the Financial Markets for its assistance in this matter.

The PCAOB oversees auditors’ compliance with the Sarbanes-Oxley Act, provisions of the securities laws relating to auditing, professional standards, and PCAOB and SEC rules.

Further information about the PCAOB Division of Enforcement and Investigations is available on the PCAOB website. Firms or individuals wishing to report suspected misconduct by auditors, or to self-report possible misconduct, may visit the PCAOB Tips and Referrals page.


About the PCAOB

The PCAOB is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect investors and further the public interest in the preparation of informative, accurate, and independent audit reports. The PCAOB also oversees the audits of brokers and dealers registered with the Securities and Exchange Commission, including compliance reports filed pursuant to federal securities laws. 


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