Don't Cheat on the Ethics Exam ACCOUNTANTS

To become a certified public accountant in the US, you need to pass four separate exams administered by the American Institute of Certified Public Accountants, which test your knowledge of business, financial accounting, regulation and the auditing process. The exams include multiple-choice questions and simulations; each exam takes four hours and is administered at a Prometric test center. Candidates are fingerprinted at the test center to make sure that they are who they say they are. Historical pass rates for most of the exams are around 50%. There are also education and work-experience requirements before you can call yourself a CPA.

Also there is an ethics test? Most states require one, anyway; some don’t. You take that one at home on your computer or whatever. The exam used in most states is open-book and multiple-choice.

And because it is online and open-book and un-proctored and not that serious, but requires a high score to pass, uh, well, this doesn’t seem very ethical:

Over multiple years, a significant number of EY audit professionals cheated on these exams by using answer keys and sharing them with their colleagues. From 2017 to 2021, 49 EY audit professionals sent and/or received answer keys to CPA ethics exams.

Ahahaha sure. That’s from a Securities and Exchange Commission enforcement action fining Ernst & Young LLP $100 million for the ethics-exam cheating, plus some cheating on internal continuing-education-type courses:

The Securities and Exchange Commission today charged Ernst & Young LLP (EY) for cheating by its audit professionals on exams required to obtain and maintain Certified Public Accountant (CPA) licenses, and for withholding evidence of this misconduct from the SEC’s Enforcement Division during the Division’s investigation of the matter. EY admits the facts underlying the SEC’s charges and agrees to pay a $100 million penalty and undertake extensive remedial measures to fix the firm’s ethical issues.

“This action involves breaches of trust by gatekeepers within the gatekeeper entrusted to audit many of our Nation’s public companies. It’s simply outrageous that the very professionals responsible for catching cheating by clients cheated on ethics exams of all things,” said Gurbir S. Grewal, Director of the SEC’s Enforcement Division. …

EY admits that, over multiple years, a significant number of EY audit professionals cheated on the ethics component of CPA exams and various continuing professional education courses required to maintain CPA licenses, including ones designed to ensure that accountants can properly evaluate whether clients’ financial statements comply with Generally Accepted Accounting Principles.

Great stuff. Look obviously cheating on the ethics exam is an incredibly dumb, bash-you-in-the-face bit of irony, but there are reasons that they cheated on the ethics exam and not, you know, the accounting exams. Those reasons are:

  1. It is easy to cheat on the ethics exams and hard to cheat on the accounting exams. The accounting exams are set up to detect and prevent cheating; the ethics exams are not. Why is that? One possible answer is, like, “you can take the accounting exams before you have taken the ethics course, so maybe you don’t know not to cheat, so they proctor you carefully, but if you take the ethics exam then you have probably studied ethics and you know not to cheat, so they trust you not to cheat.” This answer strikes me as implausible. Another possible answer is, like, “it is important for any professional certifying body to say that its members have passed an ethics exam, but you cannot teach ethics via an exam, so the professional bodies do not take these exams particularly seriously and neither do the candidates.” As someone who took the professional certifying exams for law and the securities industry, I find this answer very plausible. (Prospective lawyers spend months studying intensively for the bar exam, which tests knowledge of law, and then like 15 minutes studying for the “professional responsibility” exam, where the joke is that you can pass by always choosing the second-most-ethical answer.)
  2. Knowing accounting is very important for accountants, both in their professional self-conception and in their daily working life, but knowing the answers to the ethics questions is not that important. This is not quite the same as saying “knowing how to act ethically is not that important in the daily life of an accountant” (though that could also be true!), but the sort of ethics trivia that the exam tests might not be that applicable to your everyday work. And when you go to parties with other accountants you probably make jokes about, like, LIFO or whatever, not about ethics. The thing that distinguishes you and your colleagues from other people is not some arcane ethical code; it’s knowing about accounting. If you get hired at a big accounting firm and don’t know anything about accounting, you will quickly be found out and fired. If you get hired at a big accounting firm and don’t know anything about ethics, it’s possible it will just never come up.

Obviously though if you are going to ask one question on an ethics exam it should probably be “did you cheat on this exam,” and if the answer is yes then you have definitely failed the ethics exam.

I assume that after this E&Y, and the other big accounting firms, will drastically tighten up their procedures around, like, accountants emailing each other the answers for the open-book at-home multiple-choice online ethics exam. Possibly that will result in their accountants knowing somewhat more about the ethical code of accountancy. Still I am not convinced that the multiple-choice online exam is the best way to inculcate a sense of ethics into your workforce. So far it does not seem to work very well.

Another case against the Accounting-Industrial-Complex.

Who’s gatekeeping the gatekeepers who were gatekeeping the gatekeepers? JEEPERS!


Why wasn’t this posted in the “News that makes you say ‘WTF’” thread?

Probably because it wasn’t surprising

1 Like

because … yeah, I didn’t say WTF

it was more like…



non-Bloomberg coverage

Ouch. Of course, that’s just walkin’-around money for E&Y.