PCAOB Sanctions PwC Israel for Quality Control Violations Related to Widespread Improper Answer Sharing

The Public Company Accounting Oversight Board (PCAOB) today announced a settled disciplinary order sanctioning Kesselman & Kesselman C.P.A.s (“PwC Israel”), a member firm of PricewaterhouseCoopers International Limited, for violating PCAOB quality control standards related to integrity and personnel management. From 2017 to 2022, the firm failed to detect or prevent extensive, improper answer sharing on tests for mandatory internal training courses.

“The PCAOB will not tolerate cheating or other unethical behavior at PCAOB-registered audit firms, regardless of whether the firm is located in the United States or abroad,” said PCAOB Chair Erica Y. Williams. “We will hold firms accountable when they put investors at risk by failing to comply with the PCAOB’s quality control standards.”

Over the five-year period, hundreds of individuals from PwC Israel engaged in improper answer sharing – by either providing access to test questions or answers, or by receiving such access – in connection with online tests for mandatory internal training courses related to the firm’s U.S. auditing curriculum, professional independence, and professional ethics.

Since 2021, the PCAOB has sanctioned 10 registered firms for quality control deficiencies related to the inappropriate sharing of answers on internal training exams.

“Integrity is fundamental to effective auditing,” said Robert E. Rice, Director of the PCAOB’s Division of Enforcement and Investigations. “Investors must be able to trust that auditors will act with integrity when performing their professional duties.”

Without admitting or denying the findings in the order concerning the improper answer sharing, PwC Israel agreed to pay a $2.75 million civil money penalty. The firm was censured by the PCAOB, and it is required (1) 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 (2) to report to the PCAOB that it has done so within 150 days. 

PCAOB enforcement staff members David Florenzo, Thomas McCann, and Tiffany Johnson conducted the investigation. William Ryan and John Abell supervised 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.

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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.