In public accounting, ethical lapses don’t just bruise reputations—they can redefine them. Ernst & Young (EY), one of the world’s “Big Four” accounting firms, offers a recent and compelling example of this. In 2022, EY faced a staggering $100 million fine for ethical violations surrounding staff members who cheated on exams—a mark of institutional oversight that shook the financial world. Fast forward to 2024, and EY has fired multiple staff members over ethical breaches that reflect an apparent shift in its approach to internal accountability.
As a business ethics keynote speaker, I presented to NASBA on ethics, and this case was part of our discussion. This new case serves as a critical reminder for NASBA members of the ongoing challenges in upholding ethical standards and the sweeping changes underway in firms’ responses to ethical missteps.
The 2022 Scandal: Exam Cheating and Organizational Responsibility
EY’s troubles began in 2022 with revelations that some of its employees had cheated on ethics exams—a severe breach of trust for a firm that places itself as a global steward of financial integrity. The $100 million fine levied by the U.S. Securities and Exchange Commission (SEC) was a call to action that made it clear EY needed to address and overhaul its compliance mechanisms.
The SEC’s response symbolized the new standard for accountability across the profession. The fine wasn’t merely financial; it mandated EY to implement sweeping internal reforms, including more excellent monitoring, tighter exam protocols, and enhanced ethics training. This level of enforcement, typical of the SEC’s role in the industry, sent a strong message to all firms that failing to police internal ethics could result in financial and reputational consequences.
The 2024 Firings: A New Ethical Standard?
In 2024, the spotlight turned to EY again when the firm terminated several employees over unethical practices. These staff members had attempted to complete multiple online training courses simultaneously, which violated the integrity of their professional development requirements. EY’s quick and public response in firing these employees shows a much more stringent stance than in years past—a clear indication of the ‘new ethical standard’ that has emerged in the industry, possibly as a result of the SEC’s strict 2022 sanctions.
These actions mark a significant cultural shift for EY. The firm prioritizes ethics and integrity over simply addressing the financial ramifications of misconduct. This culture shift, which emphasizes the importance of ethics and integrity, is crucial for EY to maintain its stature. It demonstrates that the firm penalizes ethical breaches and proactively fosters a culture of accountability and professional standards, a key lesson for the accounting profession.
Lessons in Ethics for the Accounting Profession
As a business ethics speaker and former CPA, I stress three critical areas of focus that EY’s ethical turnaround highlights for the entire accounting industry:
1 Proactive Ethics Policies
The regulatory and ethical landscape for CPAs is evolving, with firms like EY providing case studies on the importance of forward-thinking policies. EY’s swift response in 2024 contrasts sharply with its delayed reaction in 2022. By establishing transparent, stringent ethical guidelines, firms can create an environment where ethical behavior isn’t just expected but actively monitored and enforced, instilling a sense of preparedness and necessity for such policies in the profession.
2. Accountability Measures and Transparency
The SEC’s intervention shows how firms must be transparent and accountable not only to regulatory bodies but to their clients and employees. Publicly addressing and correcting ethical violations strengthens a firm’s credibility and communicates to clients that ethical lapses are taken seriously. For EY, firing employees in 2024 underscores its shift to an organization intolerant of ethical shortcuts.
3. Continual Ethics Training and Reinforcement
Ethics training should never be viewed as a mere formality. Firms must continually revisit and reinforce their ethical guidelines to account for new challenges and technological advancements. From periodic compliance check-ins to engaging formats for ethics education, firms should foster an ethical mindset that becomes second nature to employees at all levels, demonstrating a continuous commitment to ethical standards and instilling a sense of reassurance and confidence in their ethical decision-making.
Building a Culture of Ethical Integrity
As CPAs and business leaders, we need to see EY’s journey as a cautionary tale and an example of resilience. Firms across industries can use similar strategies to foster an ethical culture emphasizing accountability and transparency over minimal compliance. For NASBA and CPAs nationwide, these lessons stress that ethics must remain foundational—not only for regulatory purposes but also for the integrity and sustainability of the profession as a whole. This should inspire and motivate us to uphold and promote ethical standards in our profession.
In EY’s case, the firm’s journey from penalty to reform signals that the cost of ethical lapses isn’t just financial but cultural. As we take this example to heart, we are reminded of the responsibility all CPAs have to act as ethical leaders in the world of finance. Lord knows I learned that lesson the hard way, and now, as a business ethics speaker and author, I am honored to share my journey, hoping that a different type of ethics presentation might impact my former profession.
