This is a living resource and will be updated as new scandals emerge and existing cases develop.
Originally published on: 26 September 2026
Last updated: 14 October 2026
About this timeline
The modern Big Four era began with the collapse of Arthur Andersen in the wake of the Enron accounting scandal. Andersen’s demise in 2002 reduced the Big Five to the four firms that dominate the global audit market today: Deloitte, PwC, EY and KPMG.
This timeline traces major scandals involving the Big Four audit firms from Enron in 2001 to the present, documenting more than two decades of audit failures, professional misconduct, regulatory investigations, conflicts of interest, confidentiality breaches, whistleblower allegations and other controversies.
The entries are arranged in reverse chronological order, with the most recent scandals first and the Enron scandal forming the historical starting point. Readers can use the year-by-year navigation below to move directly to a particular period.
Each scandal appears once, dated to when the underlying scandal or the firm’s alleged misconduct first became public. Subsequent developments — including investigations, court judgments, regulatory penalties, settlements and appeals — are incorporated into the original entry rather than treated as separate scandals.
The timeline includes cases involving established misconduct or professional failures, significant settlements, and substantial documented allegations that remain unresolved. Allegations are distinguished from regulatory findings and judicial decisions. The inclusion of a case does not, by itself, imply that a firm has been found to have acted unlawfully or negligently.
This is a living research resource. Entries are updated as cases develop and new evidence emerges. Wherever possible, they link to relevant Big4News investigations, detailed scandal histories, individual regulatory enforcement records and original sources, allowing readers to examine the evidence and follow developments in greater depth.
For the events that shaped the modern Big Four, see Arthur Andersen and the Enron collapse and How the Big Eight Became the Big Four.
2026 | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | 2001
Explore the scandals
Click a year or an individual scandal to jump directly to its entry.
25 August — Deloitte US discrimination settlement
18 August — EY Ghana fined over unlicensed cybersecurity services
6 August — EY Canada censured over widespread exam cheating
28 July — PwC Middle East reports exposed for fabricated AI-generated content
15 July — EY US client-data breach
30 June — EY staff accused of accessing Australian prime minister’s banking information
12 June — KPMG International report exposed for fabricated AI case studies
14 May — EY Canada AI-report controversy
9 April — Deloitte parental-leave discrimination lawsuit
24 March — KPMG Australia audit-leaks scandal
13 March — Deloitte / Mars FX audit litigation
21 November — Deloitte Canada healthcare report contained fabricated references
19 November — EY / Uchumi Supermarkets rights-issue scandal
6 November — Deloitte sexual-harassment and retaliation lawsuit
October — Deloitte Australia AI-report scandal
22 August — PwC / Corporate Travel Management accounting scandal
August — PwC / WHSmith accounting scandal
21 July — EY whistleblower lawsuit
25 June — Netherlands Big Four exam-cheating scandal
6 May — KPMG / FACE foundation audit failures
16 April — EY drawn into the Post Office Horizon scandal
March — EY / Sabah Development Bank audit negligence lawsuits
8 January — EY / Rolex France auditor-independence scandal
23 December — Deloitte / Zee Entertainment audit scandal
26 November — Deloitte / CDC vaccine-software trade-secret lawsuit
13 September — PwC China / Evergrande audit scandal
19 August — BSR / Coffee Day Enterprises audit scandal
10 April — KPMG Netherlands exam-cheating scandal
10 April — Deloitte Indonesia and Philippines exam-cheating scandal
30 November — PwC China and Hong Kong exam-cheating scandal
14 November — Cyprus Confidential: PwC, Deloitte and MeritServus
9 August — EY / Bank of America MOVEit data-breach litigation
August — Deloitte / STARK Corporation
20 April — EY / Made.com audit failures
17 March — Deloitte / China Huarong audit scandal
March–May — KPMG / Silicon Valley Bank, Signature Bank and First Republic Bank failures
23 January — PwC Australia tax-leaks scandal
11 January — Americanas accounting scandal
29 September — Deloitte China client-performed audit work scandal
July — KPMG Lower Gulf governance scandal
28 June — EY US exam-cheating scandal
30 September — Deloitte Canada audit-workpaper backdating scandal
28 September — Deloitte / Go-Ahead audit failures
1 September — KPMG accused of misleading the UK audit regulator
2 August — EY US audit-independence scandal
25 May — KPMG / Serba Dinamik audit controversy
April — PwC / Babcock audit failures
18 June — EY / Wirecard scandal
19 January — PwC / Luanda Leaks
17 December — NMC Health accounting scandal
22 November — Deloitte / SCANA and the V.C. Summer nuclear project
October — Deloitte / Eskom consulting scandal
23 September — PwC US auditor-independence violations
23 September — Thomas Cook collapse and EY audit scrutiny
28 August — KPMG / Banco Espírito Santo audit controversy
8 March — Deloitte / Tongaat Hulett accounting scandal
22 November — KPMG / Silentnight conflict-of-interest scandal
1 October — IL&FS collapse and auditor scrutiny
18 April — EY / Jessica Casucci workplace-misconduct allegations
5 April — KPMG / Conviviality collapse
April — KPMG / VBS Mutual Bank audit scandal
30 March — PwC / PrivatBank audit-negligence lawsuit
February — KPMG / Abraaj audit scandal
23 January — KPMG / PCAOB inspection-leaks scandal
15 January — KPMG / Carillion collapse
6 December — Deloitte / Hyundai Construction audit failures
5 December — Steinhoff accounting scandal
15 September — KPMG South Africa / Gupta and SARS crisis
4 May — KPMG / Rolls-Royce audit scandal
24 January — PwC / BT Italy accounting scandal
5 December — Deloitte Mexico audit-documentation scandal
7 November — PwC / Redcentric accounting scandal
18 October — EY / Weatherford audit failure
19 September — EY auditor-independence scandal
26 July — Deloitte / 1MDB audit scandal
27 June — PwC / BHS audit scandal
8 June — Deloitte / Serco audit scandal
31 May — Deloitte Consulting / US government contracting settlement
October — Valeant accounting scandal and PwC litigation
6 August — KPMG / Miller Energy Resources audit scandal
5 August — KPMG / Quindell audit scandal
20 July — Toshiba accounting scandal
5 November — PwC / Luxembourg Leaks tax scandal
25 February — EY / Kaloti gold-assurance scandal
22 October — Deloitte sanctioned for employing a suspended auditor
29 July — PwC / Quinn Insurance audit-negligence lawsuit
24 June — EY / Zungui Haixi audit scandal
17 June — KPMG / Co-operative Bank audit scandal
1 March — EY US tax-shelter scandal
20 November — Deloitte / Autonomy accounting scandal
6 August — Deloitte / Standard Chartered sanctions-compliance scandal
8 February — EY / Medicis Pharmaceutical audit failures
14 September — EY / Anglo Irish Bank audit investigation
8 September — Deloitte and the Big Four China audit-workpaper dispute
18 July — Olympus accounting scandal raises questions about KPMG and EY audits
2 June — EY / Sino-Forest accounting scandal
3 March — Deloitte / Aero Inventory audit scandal
4 August — Deloitte senior partner insider-trading scandal
11 March — EY / Lehman Brothers Repo 105 scandal
17 December — EY / Bally Total Fitness audit scandal
4 September — EY / Sons of Gwalia audit-negligence settlement
September — EY / Akai Holdings audit-document scandal
August — PwC / Colonial Bank audit-negligence case
August — Deloitte / Taylor, Bean & Whitaker audit case
20 February — PwC / Cattles and Welcome Finance accounting scandal
7 January — PwC / Satyam accounting scandal
5 August — EY commercial relationship breaches auditor-independence rules
10 December — Deloitte / Ligand Pharmaceuticals audit failures
7 February — KPMG / New Century accounting scandal
30 March — KPMG / Tenet Healthcare audit-document alteration scandal
29 September — KPMG US audit-quality inspection failures
11 July — PwC / US government travel-expense overbilling scandal
22 September — KPMG / Fannie Mae accounting scandal
11 May — PwC / Warnaco misleading audit-reporting scandal
19 December — Deloitte / Parmalat accounting scandal
16 November — KPMG US tax-shelter fraud scandal
25 September — EY / NextCard audit-document destruction scandal
22 May — PwC / SmarTalk audit and working-paper scandal
19 March — EY / HealthSouth accounting scandal
20 November — KPMG / Finance Credit audit scandal
13 November — EY / PeopleSoft auditor-independence scandal
12 September — PwC / Tyco International accounting scandal
August — KPMG / Gemstar-TV Guide accounting scandal
18 July — EY / AOL Time Warner accounting scandal
17 July — PwC auditor-independence scandal
27 June — EY Netherlands / Baan auditor-independence scandal
11 April — KPMG / Xerox accounting scandal
27 March — Deloitte / Adelphia accounting scandal
16 October — Enron accounting scandal and the collapse of Arthur Andersen
Global Big Four Scandals
2026
25 August 2026 — Deloitte US discrimination settlement
Deloitte | United States
Deloitte agreed to pay $21.5 million to resolve US Justice Department allegations that it violated the False Claims Act by certifying compliance with federal anti-discrimination requirements while allegedly taking race or sex into account in certain employment decisions. The allegations related to Deloitte entities performing work under federal contracts.
Deloitte denied the allegations, and the settlement agreement expressly states that it was neither an admission of liability by Deloitte nor a determination that the government’s claims had been proved.
18 August 2026 — EY Ghana fined over unlicensed cybersecurity services
EY | Ghana
Ghana’s Cyber Security Authority (CSA) imposed a GH¢360,000 penalty on EY Ghana for providing cybersecurity services without the required licence, including services to organisations operating Critical Information Infrastructure.
The regulator said it had directed EY Ghana in March 2026 to apply for a Cybersecurity Service Provider licence but subsequently determined that the firm had failed to comply with three separate regulatory directives. The CSA ordered EY to cease providing regulated cybersecurity services without a licence, including cybersecurity governance, risk and compliance advisory work.
Hours after announcing the penalty, the CSA and EY Ghana issued a joint statement saying their regulatory issues had been satisfactorily resolved following discussions about licensing requirements and associated administrative matters.
6 August 2026 — EY Canada censured over widespread exam cheating
EY | Canada
The Canadian Public Accountability Board (CPAB) publicly censured EY Canada after finding that more than 500 current and former professionals had improperly shared answers on mandatory internal training assessments.
The misconduct was widespread between 2017 and mid-2020, with some incidents dating back to 2014 and others continuing at a significantly reduced level through 2024. Most participants were junior professionals, although the regulator identified answer sharing at all levels of the firm, including two partners. The affected courses covered technical accounting subjects, US GAAP, IFRS and annual audit training.
CPAB found that EY Canada had introduced anti-cheating controls in 2017 but failed to assess their effectiveness or implement monitoring specifically designed to detect answer sharing until 2024. The firm had also received information about possible Canadian cheating through EY’s US and global operations but failed to investigate adequately.
Under the settlement, EY Canada was censured and required to appoint an independent external consultant to oversee remediation for up to two years. The firm must also conduct a cultural assessment, strengthen monitoring of internal communications and pay an unspecified monetary assessment covering regulatory oversight costs.
EY Canada settled without admitting or denying CPAB’s factual findings.
28 July 2026 — PwC Middle East reports exposed for fabricated AI-generated content
PwC | Middle East
An investigation by GPTZero identified fabricated citations, unsupported claims and misattributed evidence in four PwC Middle East reports published between 2024 and 2026. The findings, subsequently verified by the Financial Times, raised questions about the firm’s use of artificial intelligence and its procedures for checking published research.
One report, Transforming Governance: Citizen Pulse, claimed that government institutions in Denmark, Saudi Arabia, the United States and Australia were using a PwC framework for data-driven public services. Investigators found that the cited sources did not substantiate those claims and could identify no corroborating public evidence of the deployments described.
Other reports contained references to non-existent academic research, inaccurate statistics and unsupported examples of AI adoption. The errors formed part of a wider pattern of AI-related research failures across all four Big Four firms.
PwC Middle East said it took the accuracy of its research seriously and was updating a limited number of supporting citations. The firm maintained that employees were expected to follow its established quality-control procedures.
15 July 2026 — EY US client-data breach
EY | United States
Ernst & Young LLP disclosed a cybersecurity breach involving a third-party IT support platform used by its US tax teams. An unauthorised party had accessed the system between 28 March and 12 April 2026 and downloaded documents containing sensitive client information, potentially including Social Security numbers, financial-account details and tax records.
EY detected suspicious activity on 23 April and subsequently notified affected individuals. The incident became publicly documented when EY submitted breach notifications to US authorities in July.
The breach affected information belonging to clients of Goldman Sachs’ wealth management division, hedge fund Man Group and real estate developer Tishman Speyer. Goldman Sachs and Man Group said their own internal systems had not been compromised. The incident involved information held by EY in the course of providing professional services.
A proposed US class action subsequently alleged that EY had failed to implement adequate safeguards to protect sensitive information. EY said it had contained the incident, engaged cybersecurity specialists and was not aware of misuse of the compromised data. The allegations have not been established in court.
The ShinyHunters extortion group later claimed responsibility for the breach and alleged access to additional EY systems. Those broader claims have not been independently verified.
30 June 2026 — EY staff accused of accessing Australian prime minister’s banking information
EY | Australia
Two EY employees were dismissed after allegedly accessing Australian prime minister Anthony Albanese’s private banking information while working on secondment at Commonwealth Bank. One EY employee was charged by police with unauthorized access to restricted data; another man with no connection to EY was also charged. EY said the employees had been dismissed.
12 June 2026 — KPMG International report exposed for fabricated AI case studies
KPMG | Global
An investigation by GPTZero revealed that a KPMG International report promoting agentic artificial intelligence contained fabricated case studies, misleading claims and unreliable references. The report, Total Experience: Redefining Excellence in the Age of Agentic AI, had been published in October 2025 and described supposed AI deployments at organisations including UBS, Swiss Federal Railways and Transport for London.
The investigation found that only five of the report’s 45 references accurately supported the claims made. Several organisations named in the report disputed the descriptions of their technology, with UBS calling the claims factually incorrect and Swiss Federal Railways saying they were inaccurate.
The findings formed part of a wider pattern of AI-generated errors in Big Four reports, raising questions about the firms’ review procedures and the reliability of research published under their names.
KPMG withdrew the report and initiated an internal review.
14 May 2026 — EY Canada AI-report controversy
EY | Canada
EY Canada withdrew a cybersecurity report on loyalty-program fraud after an investigation by GPTZero identified numerous fabricated, misattributed or otherwise unreliable references. The report, Points of Attack: Uncovering Cyber Threats and Fraud in Loyalty Systems, had been published in 2025 and contained claims about cybercrime, fraud trends and loyalty-program vulnerabilities.
GPTZero said it manually checked the report’s citations after its automated systems flagged problems and found numerous references that did not support the claims attributed to them, as well as apparently invented or inaccurate material. EY subsequently retracted the study. The episode became part of a wider 2026 debate over the use of generative AI in professional-services research and the adequacy of firms’ review controls.
See the Big4News article about the case →
9 April 2026 — Deloitte parental-leave discrimination lawsuit
Deloitte | United States
Former Deloitte Consulting senior manager Joanne Barela filed a proposed class action alleging that the firm’s performance-management and compensation systems disadvantaged employees who took parental, pregnancy or pregnancy-disability leave.
Barela alleged that employees who took protected leave were evaluated against colleagues who had worked the entire performance year, potentially resulting in lower ratings, smaller salary increases and reduced bonuses. She also questioned whether periods of approved leave had adversely affected promotion assessments and redundancy decisions.
On 19 August 2026, a California federal court rejected Deloitte’s attempt to dismiss the proposed class action, allowing the proceedings to continue. The claims include alleged violations of the Family and Medical Leave Act, Title VII of the Civil Rights Act, the Pregnant Workers Fairness Act and California employment law.
Deloitte disputes the allegations and has said it intends to defend itself vigorously. The court’s decision did not establish that Deloitte discriminated against employees, and the proposed classes have not been certified.
24 March 2026 — KPMG Australia audit-leaks scandal
KPMG | Australia
A long-running internal dispute at KPMG Australia burst into public view when Australian senator Deborah O’Neill disclosed allegations from a former KPMG employee under parliamentary privilege. The whistleblower alleged that confidential client information had been improperly shared within the firm and used in attempts to win major audit mandates.
The allegations centred initially on confidential Lendlease material relating to rival audit bids. What followed developed into a much broader crisis involving further confidentiality breaches, scrutiny of KPMG’s treatment of the whistleblower, the resignation of senior leaders, lost client work, regulatory and parliamentary investigations, and restrictions on the firm’s ability to bid for new government work.
KPMG subsequently acknowledged that its initial investigation of the whistleblower’s allegations had not been conducted with the necessary rigor and apologized to the whistleblower and affected clients.
See the full KPMG Australia scandal timeline →
13 March 2026 — Deloitte / Mars FX audit litigation
Deloitte | United States / Cayman Islands
An investor in Mars FX US LP brought proceedings against Deloitte & Touche and the fund’s management, alleging serious failures in Deloitte’s audits of the investment structure.
The lawsuit challenged Deloitte’s unqualified audit opinions covering the 2020–2023 financial years, during which the fund’s reported assets increased from approximately US$19 million to US$384 million. The plaintiff alleged that Deloitte failed to obtain adequate independent confirmation of assets purportedly held through a technology and brokerage services provider, Tech RealFX.
In August 2026, a US bankruptcy court authorised representatives of the Mars FX investment structure to obtain documents from and examine Deloitte in the Cayman Islands. The order formed part of efforts to investigate the location and recoverability of assets following the fund’s financial difficulties.
The allegations against Deloitte remain unproven. The court’s authorisation of document discovery did not constitute a finding that Deloitte had breached auditing standards or committed wrongdoing.
2025
21 November 2025 — Deloitte Canada healthcare report contained fabricated references
Deloitte | Canada
A Canadian news investigation revealed fabricated and inaccurate citations in a C$1.6 million healthcare workforce report prepared by Deloitte for the government of Newfoundland and Labrador.
The 526-page Health Human Resources Plan, delivered in May 2025, was intended to inform decisions on healthcare staffing, recruitment, retention and service delivery. It contained references to academic papers that did not exist, incorrectly attributed research to named academics and included other unsupported citations.
The incident was examined alongside similar AI-related failures involving Deloitte Australia, KPMG and EY, raising concerns about the verification of evidence in professional advisory reports.
Deloitte acknowledged using artificial intelligence selectively to assist with citations and accepted responsibility for the report’s quality. The firm said it would correct the references while maintaining that the report’s substantive recommendations were unaffected.
19 November 2025 — EY / Uchumi Supermarkets rights-issue scandal
EY | Kenya
Kenya’s Capital Markets Authority (CMA) sanctioned Ernst & Young LLP over serious disclosure failures connected with the 2014 rights issue of Uchumi Supermarkets, a publicly listed retail chain.
EY had served as both external auditor and reporting accountant. The regulator’s investigation identified significant misrepresentations in financial statements included in the rights-issue information memorandum and inadequate disclosure of material facts in the company’s financial reporting.
The CMA began investigating Uchumi in 2015 and initiated administrative proceedings against EY in August 2016. EY challenged the regulator’s authority to pursue those proceedings, resulting in prolonged litigation. The High Court upheld the regulator’s powers in March 2017, and the Court of Appeal dismissed EY’s appeal in February 2022.
On 19 November 2025, the CMA imposed a KES 10 million penalty on EY for its failures in connection with the rights issue.
The regulator also required EY personnel involved in audits of listed companies and other regulated entities to undertake remedial training for three years, supervised by another EY member firm. Failure to comply could result in restrictions on the firm’s ability to provide professional services to regulated entities.
The CMA additionally recommended professional disciplinary action against EY and two engagement partners, Michael Kimoni and Joseph Cheborbor, over failures to ensure adequate and accurate disclosure of material facts.
The 2025 decision followed nearly a decade of regulatory and judicial proceedings. The regulator’s announcement did not establish that EY had deliberately participated in fraud.
6 November 2025 — Deloitte sexual-harassment and retaliation lawsuit
Deloitte | United States
Former Deloitte auditor Melanie DeCanio filed a federal lawsuit alleging sexual harassment and retaliation, claiming that she had been harassed by a supervisor and subsequently dismissed after his conduct was reported to the firm’s management.
DeCanio alleged that Deloitte used a relatively minor audit discrepancy as a pretext for terminating her employment. The issue involved approximately US$115 in a Fannie Mae audit covering US$4.3 trillion in assets. According to her complaint, the discrepancy was well below Deloitte’s own threshold for matters considered clearly trivial.
On 24 June 2026, a federal judge allowed DeCanio’s hostile-work-environment claim to proceed and left her retaliation claim in place, while dismissing certain other claims. The ruling did not establish that the alleged harassment or retaliation had occurred.
The allegations remain contested and have not been established at trial.
October 2025 — Deloitte Australia AI-report scandal
Deloitte | Australia
Deloitte Australia agreed to partially refund the Australian government over a A$440,000 report containing fabricated references, including non-existent academic sources and an inaccurate quotation attributed to a federal court judgment. The report, prepared for the Department of Employment and Workplace Relations, had used a generative AI model in its production. Deloitte issued a corrected version and said the report’s substantive findings and recommendations remained unchanged.
See the Big4News article about the case →
22 August 2025 — PwC / Corporate Travel Management accounting scandal
PwC | Australia / United Kingdom
Australian-listed Corporate Travel Management (CTM) suspended trading in its shares after disclosing serious accounting problems involving its UK operations, including overcharging of government customers. Subsequent investigations revealed that the company could have to reverse up to £128 million in revenue associated with contracts dating back to 2019.
PwC had audited CTM during the period under scrutiny. The controversy raised questions about PwC’s audit of the company’s UK operations, particularly its treatment of documents purporting to show that government customers had agreed to waive repayment of substantial overcharges. Those documents were subsequently found not to be authentic.
In April 2026, a PwC whistleblower raised concerns about the firm’s handling of audit evidence and alleged that auditors had overlooked significant warning signs. PwC appointed an external law firm to investigate.
The case attracted further scrutiny in August 2026 when reporting revealed that PwC auditors had raised questions internally about the classification and disclosure of certain UK liabilities and revenue. The extent to which those concerns were resolved before audit opinions were issued remains an important question.
The allegations concerning PwC’s audit work have not been established by a regulator or court.
August 2025 — PwC / WHSmith accounting scandal
PwC | United Kingdom / United States
British retailer WHSmith disclosed that profits in its North American business had been overstated by approximately £30 million, principally because supplier income and promotional rebates had been recognised prematurely. The disclosure triggered a sharp reduction in profit forecasts and a substantial fall in the company’s share price.
PwC had audited WHSmith since 2015. The accounting problems, which extended across several reporting periods, emerged following concerns raised by a whistleblower within the company’s finance function rather than through its statutory audits.
A subsequent independent review by Deloitte identified weaknesses in financial controls and a culture focused heavily on meeting financial targets. The case raised questions about PwC’s oversight of accounting practices in WHSmith’s overseas operations.
In June 2026, the UK Financial Reporting Council opened a formal investigation into PwC’s statutory audit of WHSmith’s financial statements for the year ended 31 August 2024.
See the Big4News article about the case →
21 July 2025 — EY whistleblower lawsuit
EY | United States
Former EY partner Joe Howie filed a federal lawsuit alleging that EY retaliated against him after he repeatedly raised concerns about audit failures, securities-law violations and improper professional conduct involving several clients. His complaint alleged that EY stripped him of leadership roles, threatened early retirement and ultimately removed him from the partnership because of his whistleblowing activities. EY has contested the allegations, which have not been adjudicated.
On 30 September 2026, a federal judge dismissed Howie’s Sarbanes-Oxley claim against Ernst & Young Global Limited, ruling that he had not plausibly alleged that the global network entity was itself an entity covered by the statute. The ruling concerned EY Global only and did not dismiss Howie’s claims against Ernst & Young LLP and Ernst & Young US LLP, which remain defendants in the litigation.
25 June 2025 — Netherlands Big Four exam-cheating scandal
Deloitte, PwC and EY | Netherlands
The PCAOB fined the Dutch firms of Deloitte, PwC and EY a combined US$8.5 million after finding widespread improper answer-sharing on mandatory internal training tests. Hundreds of personnel were involved, including partners and senior leaders, over a period lasting at least from 2018 through 2022. Deloitte and PwC were each fined US$3 million, while EY was fined US$2.5 million.
The Dutch regulator placed the firms under intensified supervision.
6 May 2025 — KPMG / FACE foundation audit failures
KPMG | France
France’s audit regulator sanctioned KPMG S.A. over serious deficiencies in its statutory audits of the Fondation Agir contre l’exclusion (FACE), a French foundation working to combat social exclusion.
The disciplinary proceedings concerned financial statements covering 2013 to 2017. The regulator found that KPMG had certified accounts containing material uncorrected misstatements, including inappropriate presentation of the foundation’s endowment and reserves, premature recognition of grant funding and inadequate impairment of a technology platform.
The findings raised significant questions about the firm’s application of accounting standards and its response to material errors in the foundation’s financial statements.
On 4 April 2025, the Haute Autorité de l’audit imposed a reprimand and a €400,000 fine on KPMG S.A. The decision was published on 6 May 2025.
Two individual auditors, Bernard Paulet and Claire Gravereau, were also reprimanded. Gravereau received an additional €20,000 penalty.
The regulator’s findings concerned the accuracy of the audited accounts and KPMG’s statutory audit responsibilities. They did not establish that KPMG had participated in deliberate fraud.
16 April 2025 — EY drawn into the Post Office Horizon scandal
EY | United Kingdom
The UK Financial Reporting Council opened an investigation into EY's statutory audits of Post Office Limited for the financial years ending in 2015, 2016, 2017 and 2018, focusing particularly on matters involving the Horizon IT system. The investigation concerns whether EY complied with the auditing standards applicable at the time, rather than the broader causes of the wrongful prosecutions associated with Horizon. The opening of the investigation does not constitute a finding of audit misconduct.
March 2025 — EY / Sabah Development Bank audit negligence lawsuits
EY | Malaysia
Sabah Development Bank (SDB) brought a negligence claim against Ernst & Young, seeking approximately RM1.975 billion over alleged failures in its audits of the state-owned development bank between 2017 and 2022.
The dispute escalated in July 2026 when the Sabah state government and related entities filed a separate RM2.4 billion lawsuit against EY, alleging breaches of professional and statutory duties in audits covering 2011–2022. The plaintiffs alleged that EY continued issuing unqualified audit opinions despite severe deterioration in SDB’s loan portfolio.
According to the July 2026 claim, by 2018, 54% of SDB’s gross loans were non-performing, with a further 32% showing significant deterioration in credit quality. The plaintiffs also alleged that EY failed to challenge inadequate impairment provisions, unreliable collateral valuations and loan restructuring practices that concealed the extent of the bank’s financial difficulties.
Following a management review, SDB reported approximately RM5 billion in non-performing loans and a net loss of RM683.96 million for 2023, after having reported profits in earlier years.
EY has said its audits complied with professional standards and that it will vigorously contest the claims. The allegations remain unproven, and no judicial finding of audit negligence has been established.
See the Big4News article about the case →
8 January 2025 — EY / Rolex France auditor-independence scandal
EY | France
France’s audit regulator sanctioned Ernst & Young Audit SAS over breaches of auditor-independence requirements in its statutory audits of Rolex France.
EY had served as Rolex France’s statutory auditor between June 2016 and October 2018. During the engagement, the company’s administrative and financial director, who also had responsibility for human resources, was married to a partner of EY Audit.
The regulator found that EY had accepted and conducted the audit engagement despite being aware of the relationship, which created circumstances liable to compromise its independence.
In a disciplinary decision dated 8 January 2025, France’s Haute Autorité de l’Audit imposed a €300,000 financial penalty on EY Audit and a separate €25,000 penalty on the signing auditor.
The regulator concluded that EY had breached professional-independence requirements by accepting and continuing the engagement despite the relationship between its partner and a senior member of the audit client’s management.
The decision concerned auditor independence and did not establish that Rolex France’s financial statements were misstated.
2024
26 November 2024 — Deloitte / CDC vaccine-software trade-secret lawsuit
Deloitte | United States
Deloitte Consulting was accused of misappropriating proprietary technology used to manage vaccination programmes in a lawsuit brought by Multi-State Partnership for Prevention (MSPP), developer of the PrepMod vaccination-management platform.
MSPP alleged that it had disclosed confidential information to Deloitte and the US Centers for Disease Control and Prevention (CDC) during presentations in April and May 2020. The CDC subsequently awarded Deloitte a contract to develop its own Vaccine Administration Management System (VAMS). MSPP alleged that Deloitte had used confidential information obtained during the presentations to develop a competing product.
The trade-secret lawsuit, filed in November 2024, included allegations of misappropriation, breach of contract and other misconduct.
In April 2026, a federal district court allowed the principal federal and state trade-secret claims to proceed, along with certain contractual and confidentiality claims. It dismissed the fraud and monopolisation claims and other parts of the complaint.
The ruling addressed the legal sufficiency of the allegations, not their ultimate truth. No finding of trade-secret misappropriation by Deloitte was made in that decision.
23 December 2024 — Deloitte / Zee Entertainment audit scandal
Deloitte | India
India’s National Financial Reporting Authority (NFRA) found serious professional misconduct by Deloitte Haskins & Sells LLP in its audits of Zee Entertainment Enterprises Limited for the 2018–19 and 2019–20 financial years.
The case centred on a ₹200 crore fixed deposit held by Zee Entertainment with Yes Bank. In July 2019, the bank prematurely appropriated the deposit to settle loans owed by seven entities associated with Zee’s promoter group. According to the regulator, the underlying arrangements and use of the company’s funds had not received the necessary board or shareholder approvals.
NFRA found that Deloitte’s auditors had failed to respond adequately to evidence of unauthorised transactions, did not exercise sufficient professional scepticism, relied excessively on management representations and failed to evaluate appropriately whether suspected fraud required reporting.
In its disciplinary order dated 23 December 2024, NFRA imposed a ₹2 crore penalty on Deloitte Haskins & Sells LLP.
Engagement partner A.B. Jani was fined ₹10 lakh and barred from audit work for five years. Engagement quality control reviewer Rakesh Sharma was fined ₹5 lakh and barred for three years.
Deloitte said that it was reviewing the order to determine its next course of action. The database record does not establish whether subsequent appeals altered the sanctions.
13 September 2024 — PwC China / Evergrande audit scandal
PwC | China
Chinese regulators imposed RMB441 million (about US$62 million) in penalties on PwC Zhong Tian and suspended its business activities for six months over its audits of Evergrande’s mainland subsidiary Hengda. The China Securities Regulatory Commission said PwC failed to detect significant financial fraud, while PwC itself said the audit work had fallen “unacceptably below” its standards. Six partners were terminated and five staff left or were dismissed, while PwC China’s territory senior partner stepped down from that role.
See the full PwC Evergrande scandal timeline →
See the Big4News articles about the case →
19 August 2024 — BSR / Coffee Day Enterprises audit scandal
BSR (KPMG-associated) | India
India’s National Financial Reporting Authority (NFRA) sanctioned BSR & Associates LLP, an audit firm associated with KPMG in India, and two senior auditors over serious professional failures in the 2018–19 statutory audit of Coffee Day Enterprises, the listed parent company of the Café Coffee Day chain.
The proceedings followed investigations into the diversion of approximately ₹35.35 billion (₹3,535 crore) from Coffee Day group companies to Mysore Amalgamated Coffee Estates Limited, an entity controlled by the group’s promoters.
NFRA found extensive deficiencies in BSR’s audit work, including failures to examine related-party transactions adequately, obtain sufficient appropriate audit evidence, exercise professional scepticism and comply with audit-documentation requirements.
In its disciplinary order dated 19 August 2024, the regulator imposed a ₹100 million penalty on BSR & Associates LLP. Engagement partner Aravind Maiya was fined ₹5 million and barred from audit work for ten years, while engagement quality control reviewer Amit Somani was fined ₹2.5 million and barred for five years.
NFRA concluded that the auditors had committed professional misconduct and had failed to perform their responsibilities in accordance with applicable auditing and quality-control standards.
BSR expressed disappointment with the decision. The case became one of India’s most significant audit-enforcement actions, highlighting deficiencies in auditor independence, related-party transaction scrutiny and engagement quality control.
10 April 2024 — KPMG Netherlands exam-cheating scandal
KPMG | Netherlands
The PCAOB imposed a record US$25 million penalty on KPMG Netherlands after finding widespread improper answer-sharing on mandatory internal training tests between 2017 and 2022. The regulator also found that the firm had made multiple misrepresentations about its knowledge of the misconduct. Former head of assurance Marc Hogeboom was permanently barred from association with a registered public accounting firm and fined US$150,000.
10 April 2024 — Deloitte Indonesia and Philippines exam-cheating scandal
Deloitte | Indonesia / Philippines
The US Public Company Accounting Oversight Board sanctioned Deloitte Indonesia and Deloitte Philippines over widespread improper answer-sharing on mandatory internal training tests. Deloitte Philippines audit partners and other personnel shared or received answers between 2017 and 2019, while more than 200 Deloitte Indonesia professionals engaged in answer-sharing between 2021 and 2023.
The PCAOB found that Deloitte Philippines’ former National Professional Practice Director, Wilfredo Baltazar, had directly and substantially contributed to the violations, including by sharing answers with other audit partners on at least six occasions. The regulator said the misconduct reflected an inappropriate tone at the top in the Philippines and failures by leadership at both firms to promote an ethical culture. Deloitte Indonesia and Deloitte Philippines were each fined US$1 million.
Baltazar was barred from association with a registered accounting firm, with the right to seek reinstatement after three years, and fined US$10,000.
2023
30 November 2023 — PwC China and Hong Kong exam-cheating scandal
PwC | China / Hong Kong
The US Public Company Accounting Oversight Board sanctioned PwC China and PwC Hong Kong over extensive improper answer-sharing on mandatory internal training tests. Between 2018 and 2020, more than 1,000 PwC Hong Kong personnel and hundreds of PwC China personnel provided or received answers using unauthorized software applications. The overwhelming majority of those involved worked in the firms’ assurance practices.
The PCAOB found that both firms had failed to detect or prevent the misconduct and had violated quality-control standards relating to integrity and personnel management. PwC Hong Kong agreed to pay a US$4 million penalty and PwC China US$3 million, without admitting or denying the findings. The cases were among the PCAOB’s first enforcement settlements with firms in mainland China and Hong Kong following the regulator’s acquisition of inspection and investigation access in 2022.
14 November 2023 — Cyprus Confidential: PwC, Deloitte and MeritServus
PwC and Deloitte | Cyprus / Global
The International Consortium of Investigative Journalists (ICIJ) and 68 media partners published Cyprus Confidential, based on 3.6 million leaked documents examining how Cyprus’s professional-services industry helped wealthy Russians and Kremlin-linked figures manage assets through offshore companies and trusts.
PwC Cyprus was at the center of the initial investigation, which documented work for Russian clients who were or subsequently became subject to sanctions, including transactions involving assets transferred as sanctions approached.
Subsequent reporting in November 2024 revealed longstanding connections between Deloitte Cyprus and MeritServus, a corporate services firm established by former Deloitte Cyprus chairman Demetris Ioannides in 2005. Despite their formal separation, the businesses maintained client, governance and administrative relationships. The UK sanctioned Ioannides and MeritServus in April 2023 over their role in providing financial services to Roman Abramovich.
On 12 October 2026, a new international investigation alleged that Deloitte Cyprus personnel helped create or approve more than 1,000 backdated corporate documents used to conceal at least US$10 billion in Abramovich-linked assets and avoid millions in taxes. The investigation identified cases in which Deloitte subsequently audited financial statements reflecting transactions supported by the disputed records, raising serious questions about audit evidence, independence and professional conduct.
Deloitte Cyprus said it complied with applicable laws and could not assess historical correspondence without access to records dating back more than 20 years. Abramovich denied wrongdoing. The allegations have not been established by a court.
August 2023 — Deloitte / STARK Corporation
Deloitte | Thailand
Investors brought proceedings against Deloitte Touche Tohmatsu Jaiyos and an individual auditor over the audit of scandal-hit Thai company STARK Corporation. The underlying corporate scandal involved alleged falsification of financial statements and serious accounting irregularities. The Southern Bangkok Civil Court proceeding against Deloitte was filed in August 2023, with a later 2024 ruling allowing a class action to proceed. The allegations against Deloitte remain contested and are not findings of liability.
9 August 2023 — EY / Bank of America MOVEit data-breach litigation
EY | United States
Ernst & Young notified affected individuals that personal information supplied by Bank of America had potentially been compromised through a vulnerability in the MOVEit file-transfer software used by EY.
The unauthorised access occurred between 27 and 31 May 2023. The affected data included personally identifiable information belonging to Bank of America customers, which EY handled in the course of providing professional services.
Litigation subsequently alleged that EY and Bank of America had failed to protect the affected information adequately. In 2026, the two organisations agreed to establish a US$2.5 million settlement fund covering approximately 198,667 individuals, subject to court approval.
EY and Bank of America denied wrongdoing and agreed to resolve the litigation without an adjudication of liability.
20 April 2023 — EY / Made.com audit failures
EY | United Kingdom
The UK Financial Reporting Council (FRC) opened an investigation into EY’s audit of online furniture retailer Made.com, which had entered administration in November 2022 following mounting financial difficulties.
EY had audited Made.com’s financial statements for 2021, the year the company listed on the London Stock Exchange. The regulator’s investigation examined the quality of the firm’s audit work, particularly its assessment of the company’s ability to continue operating and the recoverability of a deferred tax asset.
In July 2026, the FRC fined EY and audit engagement partner Julie Carlyle a combined £1.246 million for serious audit failures. EY received a £1.197 million penalty, while Carlyle was fined £49,000. Both were severely reprimanded.
The regulator found that the auditors had failed to challenge management’s financial forecasts adequately, evaluate downside scenarios and obtain sufficient appropriate evidence supporting the deferred tax asset.
EY and Carlyle admitted breaches of auditing standards. The FRC declared that the 2021 audit report had failed to meet professional requirements but did not find that Made.com’s financial statements were misstated.
March–May 2023 — KPMG / Silicon Valley Bank, Signature Bank and First Republic Bank failures
KPMG | United States
KPMG came under scrutiny after three major US regional banks it audited — Silicon Valley Bank, Signature Bank and First Republic Bank — collapsed within weeks of receiving unmodified audit opinions. Silicon Valley Bank failed on 10 March 2023, Signature Bank on 12 March and First Republic Bank on 1 May.
In September 2025, a US Senate Permanent Subcommittee on Investigations Minority Staff Report raised serious questions about KPMG’s audits of the three failed banks, following a 28-month investigation involving more than 400,000 pages of documents and nearly 100 hours of interviews and briefings.
The report found that KPMG had issued unmodified audit opinions just 14 days before Silicon Valley Bank’s failure, 11 days before Signature Bank’s collapse and 62 days before First Republic Bank failed. It questioned whether KPMG had adequately responded to warning signs concerning liquidity, internal controls, financial reporting and the banks’ ability to continue operating.
At Silicon Valley Bank, the report identified failures to recognise existing risk indicators in KPMG’s going-concern assessment. At Signature Bank, it criticised the firm’s reliance on the bank’s external lawyers to investigate whistleblower allegations of mortgage fraud. At First Republic, it questioned why concerns documented internally by KPMG had not been communicated to the bank’s board.
The investigation also highlighted longstanding audit relationships and the movement of former KPMG partners into senior positions at the banks, raising concerns about auditor independence.
KPMG rejected the report’s conclusions, maintaining that its audits complied with applicable professional standards and that the report misunderstood the responsibilities of external auditors. The Minority Staff Report did not determine whether KPMG had breached auditing standards, and no regulatory finding of audit misconduct in relation to these three engagements had been established.
See the Big4News articles about the case →
17 March 2023 — Deloitte / China Huarong audit scandal
Deloitte | China
China’s Ministry of Finance imposed penalties of approximately RMB212 million (US$31 million) on Deloitte and suspended its Beijing operation for three months over deficiencies in its audits of China Huarong Asset Management. The ministry found Deloitte had failed adequately to assess Huarong’s assets and business operations and had not properly addressed irregular transactions and other issues affecting the accuracy of Huarong’s financial reporting.
23 January 2023 — PwC Australia tax-leaks scandal
PwC | Australia
The scandal became public after Australia’s Tax Practitioners Board announced that former PwC tax partner Peter Collins had breached professional obligations by improperly sharing confidential government information obtained while advising Treasury on anti-tax-avoidance measures. The matter escalated dramatically in May 2023 when parliamentary disclosure of internal PwC emails showed that the confidential information had circulated far more widely inside the firm and had been used in work for multinational clients. Treasury subsequently referred the matter to the Australian Federal Police.
The fallout was extraordinary: CEO Tom Seymour resigned, eight partners left or were removed, government work dried up, and PwC sold its Australian government consulting business for A$1. The Australian government later described the episode explicitly as the “PwC tax leaks scandal” and launched a major package of regulatory reforms in response.
11 January 2023 — Americanas accounting scandal
PwC and KPMG | Brazil
Brazilian retailer Americanas disclosed material accounting inconsistencies on 11 January 2023, triggering a rapid corporate crisis that led to judicial reorganization days later. The company subsequently said documents reviewed by an independent committee indicated that its financial statements had been manipulated by former management.
Brazil’s securities regulator, the CVM, opened proceedings examining the work of PwC and KPMG. The regulator’s latest published case information identifies PwC’s audit work for the 2019, 2020 and 2021 financial years and KPMG’s work for 2017 and 2018. The proceedings concern possible irregularities in the firms’ audit work and do not themselves constitute findings of wrongdoing by either auditor.
2022
29 September 2022 — Deloitte China client-performed audit work scandal
Deloitte | China
The US Securities and Exchange Commission imposed a US$20 million penalty on Deloitte Touche Tohmatsu Certified Public Accountants LLP after discovering that its auditors had allowed clients to carry out procedures that were the auditors’ responsibility. The failures involved component audits of US-listed businesses as well as audits of foreign companies whose securities traded on US exchanges.
SEC investigators found that Deloitte personnel had permitted clients to choose audit samples and prepare documentation that purported to evidence the auditors’ testing. Audit files consequently suggested that independent audit work had been completed, although the firm had not adequately performed the required procedures itself.
The SEC enforcement action against Deloitte China resulted in a censure, a US$20 million civil penalty and substantial remedial obligations. These included independent reviews, strengthened auditing procedures and oversight involving Deloitte Global.
Deloitte China consented to the SEC order without admitting or denying the findings, other than those concerning the Commission’s jurisdiction.
July 2022 — KPMG Lower Gulf governance scandal
KPMG | United Arab Emirates / Oman
A governance crisis erupted publicly at KPMG Lower Gulf after partners raised concerns about the leadership of chief executive Nader Haffar, including allegations concerning conflicts of interest, the firm’s leadership-election process and the treatment of partners who had challenged management. KPMG Lower Gulf announced that it would rerun the CEO election and commission an independent external review of its governance.
28 June 2022 — EY US exam-cheating scandal
EY | United States
The US Securities and Exchange Commission imposed a $100 million penalty on Ernst & Young after finding that audit professionals had cheated on exams required to obtain and maintain CPA licences and on continuing professional education tests. The SEC also found that EY had withheld evidence of the misconduct from the regulator during its investigation. EY admitted the facts underlying the SEC’s charges and agreed to extensive remedial measures.
At the time, the penalty was the largest the SEC had ever imposed on an audit firm.
2021
30 September 2021 — Deloitte Canada audit-workpaper backdating scandal
Deloitte | Canada
The Public Company Accounting Oversight Board published a disciplinary order against Deloitte Canada after finding that personnel had backdated audit working-paper signoffs by changing their computers’ date settings to override controls in the firm’s electronic documentation system. The conduct obscured when audit work had actually been completed and reviewed.
The PCAOB identified backdating in at least six issuer audits and two quarterly reviews between November 2016 and early March 2018. It imposed a US$350,000 penalty, censured the firm and required improvements to quality controls and additional training. Deloitte settled without admitting or denying the findings, except as to jurisdiction. The regulator credited its extraordinary cooperation, including self-reporting.
In October 2023, Deloitte admitted professional-conduct breaches in a separate CPA Ontario settlement. The provincial regulator described more than 930 backdated working papers across at least 39 engagements between November 2016 and May 2018. Deloitte paid a C$900,000 fine and C$695,000 in costs. CPA Ontario also criticised the firm’s response after it became aware of the backdating and its inadequate consideration of the ethical risks.
28 September 2021 — Deloitte / Go-Ahead audit failures
Deloitte | United Kingdom
The UK government announced that it would take over Southeastern rail services after discovering that London & South Eastern Railway (LSER), a subsidiary of Go-Ahead Group, had failed to declare more than £25 million in public funds that should have been returned to the Department for Transport.
Deloitte had audited Go-Ahead’s financial statements from 2016. The Financial Reporting Council (FRC) subsequently investigated the firm’s audits for five consecutive financial years, identifying extensive failures to challenge questionable accounting practices and respond adequately to fraud risk factors.
In October 2026, the FRC fined Deloitte £6.05 million for serious audit failures, across its 2016–2020 audits of Go-Ahead Group, involving three rail subsidiaries. The findings included failures to respond adequately to the wrongful retention and accounting treatment of more than £30 million in public funds at London & South Eastern Railway, alongside separate deficiencies concerning other rail operations.
The findings also extended to Go-Ahead’s German rail operations, where inadequate audit work concerning expected contract losses was followed by a €41.4 million increase in a previously recognised provision.
Deloitte received a severe reprimand and acknowledged that aspects of its audit work had fallen short of expected standards. The FRC concluded that the firm’s audit reports for 2016–2020 had failed to satisfy applicable requirements.
1 September 2021 — KPMG accused of misleading the UK audit regulator
KPMG | United Kingdom
The UK Financial Reporting Council brought a formal disciplinary complaint against KPMG and several current and former employees over allegedly false and misleading information and documents supplied during inspections of KPMG’s audits of Carillion and Regenersis. The complaint was distinct from the underlying Carillion audit investigation: it concerned KPMG’s conduct toward the regulator itself.
The case later produced serious findings. In 2022, an independent disciplinary tribunal found misconduct including dishonesty in some instances and lack of integrity in others. KPMG had self-reported the matters to the FRC and admitted responsibility for the acts of the individuals concerned, which the tribunal treated as significant mitigation.
2 August 2021 — EY US audit-independence scandal
EY | United States
The US Securities and Exchange Commission charged EY, one current partner and two former partners with violating auditor-independence rules during a competition to win a major public-company audit. The SEC found that EY personnel solicited and received confidential competitive intelligence and audit-committee information from the company’s chief accounting officer during the request-for-proposal process. EY agreed to pay a $10 million civil penalty and accept a censure and remedial undertakings; the individuals also received penalties and suspensions. The respondents settled without admitting or denying the SEC’s findings.
25 May 2021 — KPMG / Serba Dinamik audit controversy
KPMG | Malaysia
Malaysian oil and gas services group Serba Dinamik disclosed that its auditor, KPMG, had encountered difficulties verifying billions of ringgit in transactions, including sales, receivables and contracts. KPMG had already reported its concerns to the Securities Commission Malaysia and Bursa Malaysia under its statutory reporting obligations.
The dispute escalated on 22 June 2021 when Serba Dinamik sued KPMG, accusing the firm of prematurely reporting concerns before completing its audit work. KPMG denied wrongdoing and resigned two days later, saying the lawsuit had compromised its ability to continue as independent auditor.
An independent review by EY Consulting subsequently identified further anomalies. In April 2022, Malaysian regulators imposed financial penalties on Serba Dinamik and several executives over false financial reporting.
The controversy took another turn in 2026 when KPMG faced two further lawsuits concerning its Serba Dinamik audits. The company’s liquidator sought at least RM1.56 billion in damages, alleging that KPMG should have detected extensive accounting irregularities during its 2016–2019 audits. Separately, investment manager AmanahRaya alleged that KPMG had failed to disclose or escalate its 2021 concerns sufficiently before AmanahRaya invested almost RM96 million in Serba Dinamik debt.
KPMG disputes the allegations. The proceedings raise contrasting questions about whether the firm reported its concerns prematurely in 2021, should have identified problems during earlier audits, or should have communicated its concerns more widely. The 2026 claims remain unproven.
See the Big4News article about the case →
April 2021 — PwC / Babcock audit failures
PwC | United Kingdom
Babcock International disclosed significant accounting problems following a review of its contract profitability and balance sheet. The review ultimately produced approximately £2 billion in adjustments, including corrections of prior-period errors, changes in estimates and impairments. PwC had audited the defence and engineering group throughout the affected period.
In March 2023, the UK Financial Reporting Council (FRC) fined PwC £5.625 million over serious failures in its 2017 and 2018 Babcock audits and the 2018 audit of its Devonport Royal Dockyard subsidiary. The regulator identified repeated failures to challenge management, obtain sufficient audit evidence and follow basic audit procedures.
In July 2026, the FRC imposed a second £3.25 million penalty on PwC for serious failures in the 2019 and 2020 audits. Former engagement partner John Waters was fined £59,062. The regulator found that warnings from component auditors and PwC’s own specialists had not been adequately addressed, including concerns over aircraft accounting, financing arrangements and asset valuations.
Across the two proceedings, the FRC established serious audit failures spanning four consecutive financial years. PwC and the relevant audit partners admitted breaches of professional standards. The regulator expressly found that the breaches in the 2019 and 2020 audits were not dishonest, deliberate or reckless.
See the Big4News article about the case →
2020
18 June 2020 — EY / Wirecard scandal
EY | Germany
German payments company Wirecard announced that EY had refused to sign off its 2019 accounts because the auditor could not confirm the existence of €1.9 billion in cash, around a quarter of the company’s reported balance sheet. Wirecard subsequently said the money probably did not exist and filed for insolvency on 25 June owing creditors almost €4 billion. EY had audited Wirecard for more than a decade.
The collapse triggered intense scrutiny of how the alleged fraud had remained undetected for years (despite whistleblower Pav Gill sending the firm a dossier highlighting fraudulent invoices and documentation). An independent KPMG investigation commissioned before the collapse had already reported that it could not verify significant parts of Wirecard’s third-party acquiring business because sufficient documentation had not been provided.
See the Big4News interview with Pav Gill, the Wirecard whistleblower →
19 January 2020 — PwC / Luanda Leaks
PwC | Angola / Global
The International Consortium of Investigative Journalists published the Luanda Leaks, based on more than 715,000 documents concerning the business empire of Isabel dos Santos, daughter of Angola’s former president José Eduardo dos Santos. The investigation put PwC under intense scrutiny for the extensive accounting, audit and advisory work performed by firms in its international network for companies linked to dos Santos and her husband. ICIJ reported that PwC had continued providing services after a number of banks and other professional firms had become unwilling to work with her businesses. PwC subsequently said it had begun an investigation into its work and moved to terminate relationships with entities controlled by the family.
2019
17 December 2019 — NMC Health accounting scandal
EY | United Kingdom / UAE
The NMC Health scandal first became publicly significant when short seller Muddy Waters published a report on 17 December 2019 questioning NMC’s financial statements, balance sheet and debt disclosures. NMC’s shares fell sharply and the company launched an independent review within days.
The crisis intensified in 2020 when NMC disclosed more than $4 billion in previously undisclosed debt, entered administration and became the subject of regulatory investigations and major litigation. EY had audited NMC for years; the FRC opened an investigation into EY’s 2018 audit in April 2020. NMC’s administrators later accused EY of negligence, while EY denies wrongdoing and says it was itself deceived by a sophisticated fraud.
22 November 2019 — Deloitte / SCANA and the V.C. Summer nuclear project
Deloitte | United States
Investors filed a securities class action against Deloitte over its audits of South Carolina utility SCANA, alleging that the firm continued issuing unqualified audit opinions while the company’s V.C. Summer nuclear project was suffering severe cost overruns and delays. The project, on which SCANA and its partner spent roughly $9 billion, was abandoned in 2017. Deloitte had audited SCANA since 1945.
The litigation survived repeated attempts at dismissal and ultimately produced a $34 million settlement, which received final approval in 2026. Deloitte did not admit liability; settlement filings themselves acknowledge substantial uncertainty over whether investors could have proved that Deloitte’s audit opinions were false or that the firm acted with the necessary state of mind for securities liability.
October 2019 — Deloitte / Eskom consulting scandal
Deloitte | South Africa
Eskom launched legal proceedings against Deloitte Consulting seeking to recover R207 million paid under two consulting task orders awarded between 2016 and 2017 without an open and competitive tender process. Eskom alleged that the procurement process had been irregular and highly improper.
In March 2020, Deloitte agreed to repay R150 million in full and final settlement. The joint statement between Deloitte and Eskom said their investigations had found no evidence of state capture or corruption, but Deloitte accepted that it had participated in an irregular procurement process. Eskom acknowledged that it had received value from Deloitte’s services.
23 September 2019 — PwC US auditor-independence violations
PwC | United States
The US Securities and Exchange Commission charged PwC with auditor-independence violations and improper professional conduct relating to 19 engagements for 15 SEC-registered issuers. The SEC found that PwC had provided prohibited non-audit services to an audit client, including exercising decision-making authority in designing and implementing financial-reporting software, and had weaknesses in controls governing non-audit services.
PwC agreed to pay more than $7.9 million in monetary relief and accepted remedial undertakings, without admitting or denying the findings.
23 September 2019 — Thomas Cook collapse and EY audit scrutiny
EY | United Kingdom
Thomas Cook collapsed after rescue negotiations failed, triggering immediate scrutiny of its financial reporting and EY’s audits. EY had taken over as auditor from PwC in 2017. On 1 October 2019, the UK Financial Reporting Council opened an investigation into EY’s audit of Thomas Cook’s 2018 financial statements, later extending it to the 2017 audit.
The significance of the episode became clearer later: in 2025 EY and the audit partner admitted serious breaches relating to goodwill impairment, going concern and independence, and the FRC said both audits failed in their principal objective of obtaining reasonable assurance that the financial statements were free from material misstatement. The FRC did not allege that amounts in the accounts were actually misstated or that use of the going-concern basis was inappropriate.
28 August 2019 — KPMG / Banco Espírito Santo audit controversy
KPMG | Portugal
KPMG Portugal came under regulatory scrutiny over its audits of Banco Espírito Santo (BES), the Portuguese bank that collapsed in August 2014 following the discovery of severe financial irregularities and substantial losses.
On 28 August 2019, three KPMG audit partners who had worked on BES — Fernando Antunes, Inês Viegas and Sílvia Gomes — requested the cancellation of their auditor registrations while facing regulatory scrutiny concerning their professional suitability. The individuals had previously been sanctioned by Banco de Portugal over information provided to the banking regulator.
In October 2020, Portugal’s securities regulator, the Comissão do Mercado de Valores Mobiliários (CMVM), imposed a €1 million penalty on KPMG over deficiencies in its audit work relating to BES, including inadequate documentation and insufficient evidence concerning important audit procedures.
In July 2021, the Competition, Regulation and Supervision Court reduced the penalty to €450,000 after reconsidering the legal classification of the infringements. The court also recognised that KPMG had contributed to identifying serious problems at BES in 2014, including transactions that led the bank to recognise approximately €700 million in provisions.
In December 2021, the Lisbon Court of Appeal upheld the €450,000 penalty, rejecting KPMG’s appeal. Contemporary reporting indicated that a further appeal to Portugal’s Constitutional Court remained possible.
8 March 2019 — Deloitte / Tongaat Hulett accounting scandal
Deloitte | South Africa
South African sugar producer Tongaat Hulett warned shareholders that a strategic and financial review had uncovered practices requiring further examination, including practices that could affect previously reported financial information. The company later said its 2018 financial statements would have to be restated and appointed PwC to conduct a forensic investigation. That investigation ultimately found that certain senior executives had initiated or participated in accounting practices that overstated Tongaat’s profits over a number of years.
Deloitte was Tongaat Hulett’s external auditor during the period covered by the restatements, and South Africa’s Independent Regulatory Board for Auditors launched an inquiry into the audit. The affair later entered the criminal courts: in 2022, six former Tongaat executives and former Deloitte audit partner Gavin Kruger appeared in court on fraud charges relating to alleged accounting practices including the backdating of land-sale agreements. The criminal charges are allegations and do not constitute findings of guilt.
Deloitte subsequently reached a settlement relating to its Tongaat Hulett audit work.
2018
22 November 2018 — KPMG / Silentnight conflict-of-interest scandal
KPMG | United Kingdom
The UK Financial Reporting Council brought a formal disciplinary complaint against KPMG and restructuring partner David Costley-Wood over their work for mattress manufacturer Silentnight. The complaint alleged that their professional judgment and objectivity had been compromised and that they had knowingly or recklessly assisted in providing untrue, misleading or materially incomplete explanations to the Pension Protection Fund, the Pensions Regulator, Silentnight and the trustees of its pension scheme.
An independent disciplinary tribunal later found misconduct involving breaches of the fundamental principles of objectivity and integrity. It concluded that KPMG had failed to act solely in Silentnight’s interests while assisting private-equity firm HIG in a plan to acquire the business free of its pension liabilities. KPMG was fined £13 million in 2021 and severely reprimanded. Costley-Wood was fined £500,000 and excluded from membership of the ICAEW for 13 years. The tribunal also found that KPMG and Costley-Wood had, in part, advanced an untruthful defence during the regulatory proceedings.
1 October 2018 — IL&FS collapse and auditor scrutiny
Deloitte and BSR | India
The Indian government took control of Infrastructure Leasing & Financial Services after a series of debt defaults triggered fears of contagion across India’s financial system. The Ministry of Corporate Affairs said the affairs of IL&FS and its group companies were being conducted in a manner prejudicial to the public interest and secured an order replacing the company’s board. Auditor scrutiny subsequently focused heavily on IL&FS Financial Services, or IFIN, whose 2017–18 financial statements had been jointly audited by Deloitte Haskins & Sells and BSR & Associates.
India’s National Financial Reporting Authority later concluded that Deloitte’s audit failures were sufficiently significant that the firm lacked adequate justification for stating that the IFIN audit complied with auditing standards, and described Deloitte’s quality-control system and processes as severely inadequate and ineffective. NFRA subsequently found significant failures in BSR’s work on the same audit, including issues involving material misstatements, going concern and communications with those charged with governance, and concluded that BSR’s appointment as statutory auditor had been invalid from the outset. BSR was part of the audit network associated with KPMG in India.
April 2018 — KPMG / VBS Mutual Bank audit scandal
KPMG | South Africa
KPMG South Africa came under scrutiny over its audit of VBS Mutual Bank after former audit partner Nhlanhla Sipho Malaba resigned amid disciplinary proceedings concerning undisclosed financial interests connected with the bank. VBS subsequently collapsed following extensive fraud and looting that deprived depositors and municipalities of substantial funds.
During the 2017 audit, junior KPMG auditors identified unexplained discrepancies of approximately R700 million in VBS’s cash balances and escalated their concerns. Malaba nevertheless authorised an unqualified audit opinion.
In April 2026, South Africa’s Independent Regulatory Board for Auditors (IRBA) permanently barred Malaba from practising as an auditor after finding him guilty of serious professional misconduct. The disciplinary panel found that he had acted dishonestly, knowingly suppressed audit concerns, participated in concealing a fictitious balance-sheet asset and authorised a clean audit opinion despite unresolved cash discrepancies.
The panel also found that Malaba’s independence was compromised by approximately R25 million in credit facilities obtained from VBS by businesses associated with him. It imposed fines totalling R1.6 million and ordered him to pay more than R9.2 million in disciplinary costs.
Separately, KPMG faced civil proceedings brought by the bank’s liquidator. The parties reached a confidential settlement in 2024, with South African media reporting a payment of R500 million, although the settlement terms were not publicly disclosed.
See the Big4News article about the case →
18 April 2018 — EY / Jessica Casucci workplace-misconduct allegations
EY | United States
Jessica Casucci, a partner in Ernst & Young’s New York tax practice, filed a complaint with the US Equal Employment Opportunity Commission alleging sexual assault by another partner and retaliation after she reported the incident.
Casucci alleged that a fellow partner had sexually assaulted her at a work-related event in 2015 and that the firm’s subsequent handling of her complaint had adversely affected her professional position. She also alleged that she had been obliged to rebuild her client relationships to avoid working with the individual concerned.
In May 2018, EY and Casucci reached a confidential settlement, under which she left the firm. EY confirmed that the partner accused of misconduct had been dismissed.
5 April 2018 — KPMG / Conviviality collapse
KPMG | United Kingdom
UK drinks wholesaler and retailer Conviviality entered administration after a rapid financial crisis that included profit warnings, the discovery of an unexpected £30 million tax liability and an unsuccessful attempt to raise emergency equity. The UK Financial Reporting Council subsequently opened an investigation into KPMG’s audit of Conviviality for the year ended 30 April 2017.
In 2022, KPMG and audit partner Nicola Quayle admitted audit failures spanning several significant areas of the financial statements, including risk assessment, revenue recognition, supplier income, goodwill impairment and professional scepticism. The FRC described the failures as serious and imposed a £4.3 million financial sanction on KPMG, reduced to £3.01 million for admissions and early disposal.
30 March 2018 — PwC / PrivatBank audit-negligence lawsuit
PwC | Cyprus / Ukraine
Ukraine’s nationalised PrivatBank filed a US$3 billion lawsuit against PwC Limited (Cyprus) and the Ukrainian audit firm PwC, alleging serious failures in their audits of the bank’s financial statements for 2013, 2014 and 2015.
The proceedings, brought before the District Court of Nicosia in Cyprus, alleged that PwC had failed to identify a massive fraud involving PrivatBank’s former owners and a corporate loan portfolio that had become overwhelmingly non-performing. The bank argued that the auditors had breached their professional duties and sought compensation for losses it attributed to those alleged failures.
In its announcement of the proceedings on 2 April 2018, PrivatBank said the action was intended to recover losses ultimately borne by the Ukrainian state following the bank’s nationalisation.
The allegations against PwC should be distinguished from separate proceedings against PrivatBank’s former owners. PwC Cyprus denied the allegations made against it. The outcome of the Cyprus audit-negligence litigation has not been established in the sources reviewed, and the allegations should not be treated as judicial findings against PwC.
February 2018 — KPMG / Abraaj audit scandal
KPMG | United Arab Emirates
Dubai-based private-equity group Abraaj entered a severe financial crisis in February 2018 after investors raised questions about the use of money in its US$1 billion healthcare fund. The controversy led to investigations, creditor action and, later that year, the group’s provisional liquidation. KPMG member firms had audited parts of the Abraaj group, including KPMG LLP’s audits of Dubai Financial Services Authority-regulated Abraaj Capital Limited.
The DFSA later found serious failures in KPMG LLP’s audits of Abraaj Capital Limited. The regulator said KPMG had failed to perform some of the most basic audit procedures and that, had the audits been conducted to the required standard, it would have been reasonable to expect the firm to identify for more than five years that the company’s financial statements did not comply with accounting rules, that it lacked adequate capital resources and that the true state of its finances was being concealed from KPMG. In 2022, the DFSA fined KPMG LLP US$1.5 million — at the time the largest fine it had imposed on an auditor — and former audit partner Milind Navalkar US$500,000.
23 January 2018 — KPMG / PCAOB inspection-leaks scandal
KPMG | United States
US prosecutors charged former KPMG executives and former PCAOB employees in a scheme to steal confidential information identifying which KPMG audits would be inspected by the regulator. Prosecutors alleged that KPMG personnel used the information to improve the firm’s performance in PCAOB inspections. One former KPMG partner had already pleaded guilty earlier that month.
The affair later produced criminal convictions and a $50 million SEC penalty against KPMG in 2019. The SEC proceedings also addressed misconduct involving internal training examinations.
15 January 2018 — KPMG / Carillion collapse
KPMG | United Kingdom
UK construction and outsourcing group Carillion entered compulsory liquidation on 15 January 2018, leaving major public contracts unfinished, thousands of jobs at risk and a large pension deficit. KPMG had audited Carillion since its creation in 1999 and had issued an unmodified audit opinion on its 2016 financial statements only months before the collapse. Parliament subsequently scrutinized all four Big Four firms for work performed for Carillion, while the FRC opened an investigation into KPMG’s audits for 2014–2016 and additional audit work performed in 2017.
In October 2023, the FRC sanctioned KPMG following investigations into its audits of Carillion. KPMG LLP was fined £18.55 million, after discounts, for serious failures in its audits for 2014–2016 and additional work in 2017. KPMG Audit plc received a separate £2.45 million penalty concerning the 2013 audit. The regulator found extensive failures to obtain sufficient audit evidence, exercise professional skepticism and challenge management’s accounting judgments. Two former audit partners were also sanctioned. The combined £21 million in penalties imposed on the two KPMG entities represented an exceptionally severe enforcement outcome.
2017
6 December 2017 — Deloitte / Hyundai Construction audit failures
Deloitte | South Korea
South Korea’s financial regulator sanctioned Deloitte Anjin over deficiencies in its audits of Hyundai Engineering & Construction, one of the country’s largest construction companies.
The Financial Services Commission (FSC) found that Hyundai Engineering & Construction had improperly accounted for construction contracts between 2013 and 2016, including failures to reflect changes in estimated construction costs when calculating project completion rates. The accounting irregularities resulted in misstated revenue and liabilities.
The regulator also identified inadequate provisions for doubtful construction receivables and failures to reflect accounting violations by subsidiaries in the company’s financial statements.
On 6 December 2017, the FSC imposed a KRW900 million penalty on Deloitte Anjin for breaches of auditing standards in its work on Hyundai Engineering & Construction.
The firm was also required to make additional contributions to its professional liability fund and was barred from auditing Hyundai Engineering & Construction for two years.
The regulator separately imposed a KRW3.2062 billion penalty on Hyundai Engineering & Construction for its accounting violations.
The case represented a separate enforcement action from Deloitte Anjin’s involvement in the Daewoo Shipbuilding accounting scandal, which had resulted in a one-year restriction on the firm’s ability to accept new audit engagements earlier in 2017.
5 December 2017 — Steinhoff accounting scandal
Deloitte | South Africa / Europe
Steinhoff International disclosed accounting irregularities after its chief executive resigned, triggering a collapse in the company’s share price and investigations across several jurisdictions. Deloitte South Africa had audited Steinhoff’s South African entity, and on 15 December 2017 South Africa’s Independent Regulatory Board for Auditors opened an investigation into Deloitte’s audits for the 2014–2016 financial years.
IRBA later confirmed that it was reviewing Deloitte’s audit files and emphasized that the existence of accounting irregularities did not itself establish an audit failure. The Steinhoff collapse nevertheless became one of South Africa’s largest corporate accounting scandals and placed Deloitte’s audit work under sustained regulatory scrutiny.
Deloitte later contributed to Steinhoff’s global litigation settlement. Under the settlement arrangements reached in 2021, Deloitte Accountants B.V. and Deloitte & Touche South Africa agreed to make up to €70.34 million available to certain shareholder and contractual claimants in exchange for releases and waivers. Deloitte did not admit liability for losses arising from the accounting irregularities.
15 September 2017 — KPMG South Africa / Gupta and SARS crisis
KPMG | South Africa
KPMG South Africa became engulfed in a major reputational crisis over its work for companies linked to the Gupta family and a separate investigation it had conducted for the South African Revenue Service into the so-called “rogue unit.” KPMG International announced on 15 September 2017 that it was setting aside the conclusions and recommendations of the SARS report after an internal review found significant problems with the work, while several senior KPMG South Africa leaders left the firm.
The Gupta-related controversy had already prompted South Africa’s audit regulator to open an investigation into KPMG’s audits of Linkway Trading in June 2017.
4 May 2017 — KPMG / Rolls-Royce audit scandal
KPMG | United Kingdom
The UK Financial Reporting Council opened an investigation into KPMG’s audits of Rolls-Royce after the engineering group entered into settlements with authorities in the United Kingdom, United States and Brazil over a long-running international bribery and corruption scheme. The agreements included a deferred prosecution agreement with the UK Serious Fraud Office and formed part of an approximately US$800 million global resolution.
In 2022, the FRC sanctioned KPMG and former audit partner Anthony Sykes over the 2010 audit. The regulator found failures to address matters identified during the audit that indicated a risk of non-compliance with laws and regulations, involving payments to agents in India that later featured in two counts of the Rolls-Royce deferred prosecution agreement. KPMG received a £4.5 million financial sanction, reduced to £3.375 million for admissions and early disposal, as well as a severe reprimand and other remedial requirements.
24 January 2017 — PwC / BT Italy accounting scandal
PwC | United Kingdom / Italy
BT disclosed that an investigation into its Italian business had uncovered improper accounting practices and a complex series of improper sales, purchase, factoring and leasing transactions that had overstated earnings over a number of years. The company increased the estimated financial impact of the problems from £145 million to approximately £530 million, prompting a sharp fall in BT’s share price. PwC was BT’s external auditor.
The UK Financial Reporting Council subsequently investigated PwC’s audits of BT. In 2022, PwC and audit partner Richard Hughes were sanctioned over the audit for the year ended 31 March 2017. The FRC found breaches relating to PwC’s work on the BT Italy adjustments, where the discovery of fraud required heightened professional scepticism and special audit consideration. PwC received a £2.5 million financial sanction, reduced to £1.75 million for admissions and early disposal.
2016
5 December 2016 — Deloitte Mexico audit-documentation scandal
Deloitte | Mexico
The US Public Company Accounting Oversight Board (PCAOB) fined Deloitte Mexico US$750,000 for repeated failures to comply with audit-documentation requirements between 2011 and 2015.
The regulator found that the firm had repeatedly failed to assemble final audit documentation within the required 45-day period. Although internal monitoring identified recurring problems, Deloitte Mexico did not take effective corrective action or implement adequate quality-control procedures.
The firm was censured and required to improve its documentation systems, provide additional training and submit quarterly compliance certifications for one year. Deloitte Mexico settled without admitting or denying the findings.
7 November 2016 — PwC / Redcentric accounting scandal
PwC | United Kingdom
UK IT-services company Redcentric disclosed that an internal review had uncovered misstated accounting balances and warned that previously audited accounts were likely to require restatement. The company initially estimated that correcting the historic misstatements would reduce net assets by at least £10 million and said previously reported net-debt figures could no longer be relied upon. Redcentric’s share price fell sharply following the announcement.
PwC had audited Redcentric since 2014. In 2019, the UK Financial Reporting Council sanctioned PwC and two audit partners over the 2015 and 2016 audits. The regulator said the breaches were numerous and, in some cases, basic or fundamental, including failures to exercise professional scepticism. PwC received a £6.5 million financial sanction, reduced to £4.55 million for admissions and early disposal.
18 October 2016 — EY / Weatherford audit failure
EY | United States
The SEC charged EY over audit failures relating to oilfield-services company Weatherford International, which had used deceptive income-tax accounting to inflate earnings. The regulator found that EY’s audit team repeatedly failed to detect the fraud despite classifying the audits as high risk and being aware of recurring year-end tax adjustments that materially reduced Weatherford’s tax provision.
EY agreed to pay more than $11.8 million in disgorgement, interest and penalties, while two audit-team partners were suspended from practising before the SEC. EY and the individuals settled without admitting or denying the findings.
19 September 2016 — EY auditor-independence scandal
EY | United States
The US Securities and Exchange Commission charged EY and several current and former partners over auditor-independence failures arising from unusually close personal relationships with audit-client executives.
In one case, an EY partner maintained a romantic relationship with a client’s chief accounting officer; in another, a senior partner developed what the SEC described as an improperly close friendship with a client’s CFO, involving overnight trips, gifts and extensive personal contact. EY agreed to pay approximately $9.3 million to settle the two matters without admitting or denying the SEC’s findings.
26 July 2016 — Deloitte / 1MDB audit scandal
Deloitte | Malaysia
Deloitte Malaysia said its audit reports on 1Malaysia Development Berhad’s 2013 and 2014 financial statements should no longer be relied upon, six days after the US Department of Justice announced civil-forfeiture proceedings alleging that more than US$3.5 billion had been misappropriated from the Malaysian sovereign wealth fund. Deloitte said information contained in the US complaint, had it been known at the time of the audits, would have affected both the financial statements and its audit reports. The firm had tendered its resignation as 1MDB’s auditor in February 2016.
The regulatory consequences continued for years. In 2019, Malaysia’s Securities Commission reprimanded Deloitte and imposed RM2.2 million in penalties for four breaches relating to a RM2.4 billion sukuk programme involving 1MDB-linked entities, including failures to report material irregularities promptly. In 2021, Deloitte agreed to pay the Malaysian government RM324 million to resolve all government claims concerning its fiduciary duty in auditing 1MDB and SRC International between 2011 and 2014. The government described it as the largest 1MDB-related settlement by an audit firm in Southeast Asia.
27 June 2016 — PwC / BHS audit scandal
PwC | United Kingdom
The UK Financial Reporting Council opened an investigation into PwC’s audit of collapsed retailer BHS following the company’s entry into administration in April 2016. PwC had audited BHS’s financial statements for the year ended 30 August 2014, shortly before the business was sold by Sir Philip Green’s Taveta group for £1.
In 2018, PwC and audit partner Steve Denison admitted misconduct in relation to the 2014 audits of BHS and the Taveta Group. The FRC imposed a £10 million fine on PwC, reduced to £6.5 million for settlement, as well as a severe reprimand and additional monitoring requirements. Denison was fined £500,000, reduced to £325,000, and agreed not to perform audit work for 15 years. The misconduct covered multiple areas of the audits, including planning, going concern, the income statement and impairment.
8 June 2016 — Deloitte / Serco audit scandal
Deloitte | United Kingdom
The UK Financial Reporting Council opened an investigation into Deloitte’s audits of companies within the Serco group for 2011 and 2012 after receiving information from the Serious Fraud Office, which was investigating Serco’s electronic-monitoring contracts for the UK government.
In 2019, Deloitte and audit partner Helen George admitted misconduct in relation to the audits of Serco Geografix, including failures to act with professional competence and due care. Deloitte received a £6.5 million fine, reduced to £4.225 million for settlement, and a severe reprimand. A second Deloitte audit partner, Ross Howard, was subsequently sanctioned over the 2012 audit.
31 May 2016 — Deloitte Consulting / US government contracting settlement
Deloitte | United States
Deloitte Consulting agreed to pay $11.38 million to resolve US Department of Justice allegations that it submitted false claims under a General Services Administration contract for information-technology services. The contract required Deloitte to reduce the prices charged to the federal government when it offered lower prices to specified commercial customers. The government alleged that, between 2006 and 2012, Deloitte failed to comply with that price-reduction requirement, causing federal customers to pay more than comparable commercial clients.
The settlement resolved allegations under the False Claims Act. There was no determination of liability. A GSA Inspector General report said its earlier post-award audit had identified defective pricing data, overbillings and unreported price reductions, which ultimately led to the Justice Department investigation.
2015
2015 — Deloitte / Daewoo Shipbuilding accounting scandal
Deloitte | South Korea
Deloitte Anjin, the South Korean member firm of Deloitte, came under regulatory scrutiny over its audits of Daewoo Shipbuilding & Marine Engineering, one of the world’s largest shipbuilders, after serious accounting irregularities emerged at the company.
Daewoo Shipbuilding had understated substantial losses during 2013 and 2014 through improper accounting practices that concealed the deterioration of its financial position. South Korea’s Financial Supervisory Service began investigating Deloitte Anjin’s audit work in late 2015.
The controversy escalated in December 2016 when prosecutors indicted Deloitte Anjin and several employees over alleged involvement in accounting fraud at Daewoo Shipbuilding.
On 24 March 2017, South Korea’s Securities and Futures Commission announced major sanctions against the firm. These were confirmed by the Financial Services Commission on 5 April 2017.
Deloitte Anjin was barred from accepting new audit engagements for one year, prohibited from auditing Daewoo Shipbuilding for five years and ordered to pay KRW1.6 billion in connection with falsified stock-related documentation.
The sanctions reflected regulatory findings extending beyond inadequate audit procedures to serious concerns about the integrity of the firm’s professional conduct. The one-year restriction also had significant commercial consequences for Deloitte Anjin’s audit practice.
October 2015 — Valeant accounting scandal and PwC litigation
PwC | Canada / United States
Valeant Pharmaceuticals became engulfed in controversy in October 2015 as questions emerged about its relationship with specialty pharmacy Philidor Rx Services and its accounting and disclosure practices. On 26 October, Valeant’s board established an independent committee to review allegations concerning the Philidor relationship. The company subsequently determined that certain revenue from sales to Philidor had been recognized prematurely, restated previously issued financial statements and identified material weaknesses in its internal controls over financial reporting.
PwC was Valeant’s external auditor. Investors subsequently pursued securities claims against the firm alleging that its audit report on Valeant’s financial statements was materially false or misleading. A US$1.21 billion settlement reached with Valeant and other defendants expressly excluded PwC, leaving the auditor as a defendant in the US securities litigation. The case against PwC remained active in 2026, when PwC was pursuing summary judgment. The claims against PwC remain contested and have not been finally adjudicated.
6 August 2015 — KPMG / Miller Energy Resources audit scandal
KPMG | United States
The US Securities and Exchange Commission brought charges against Miller Energy Resources, an oil and gas company, and several executives in connection with alleged accounting fraud involving Alaskan oil and gas properties. Assets acquired for approximately US$4.5 million, including liabilities assumed, had been valued in the company’s accounts at approximately US$480 million.
KPMG became the company’s external auditor in 2011 and issued an unqualified audit opinion despite significant concerns surrounding the asset valuations. The SEC subsequently determined that KPMG had failed to obtain sufficient appropriate evidence concerning opening asset balances, adequately evaluate the assumptions used in the valuations and identify assets that had been counted twice.
In August 2017, the SEC sanctioned KPMG over its Miller Energy audit, ordering approximately US$6.23 million in disgorgement, interest and civil penalties. The firm was also censured and required to strengthen aspects of its auditing practices.
KPMG settled the proceedings without admitting or denying the SEC’s findings, except for admissions concerning jurisdiction.
5 August 2015 — KPMG / Quindell audit scandal
KPMG | United Kingdom
The UK Financial Reporting Council announced an investigation into the preparation, approval and audit of Quindell’s financial statements after extensive revisions to the insurance-claims processor’s historical accounts. The restatements transformed Quindell’s previously reported 2013 profit after tax of £83 million into a £68 million loss and reduced reported net assets from £668 million to £446 million. The FRC noted at the time that the company and its auditor had been unable to determine whether all material errors and omissions arising from historic transactions had been identified.
KPMG had been appointed as Quindell’s auditor in 2013 and issued an unmodified opinion on that year’s financial statements. In 2018, KPMG and audit partner William Smith admitted misconduct relating to revenue recognition for legal services and transactions involving software licences, related services and investments. The FRC said they had failed to obtain reasonable assurance that the financial statements were free from material misstatement, obtain sufficient appropriate audit evidence and exercise sufficient professional scepticism. KPMG received a £4.5 million fine, reduced to £3.15 million for settlement.
20 July 2015 — Toshiba accounting scandal
EY | Japan
Toshiba received the report of an independent investigation committee on 20 July 2015 after an investigation into inappropriate accounting across several parts of the Japanese conglomerate. The independent investigation examined accounting practices involving infrastructure projects, visual products, semiconductors and the PC business. Toshiba subsequently said the matters examined by the committee resulted in approximately ¥151.8 billion of downward adjustments to cumulative pre-tax income, with further corrections taking the total adjustment to approximately ¥156.2 billion. Senior executives, including the company’s president and CEO, resigned as the scandal unfolded.
Toshiba had been audited by Ernst & Young ShinNihon, an EY member firm. In December 2015, Japan’s Financial Services Agency suspended EY ShinNihon from accepting new audit engagements for three months, finding that partners had negligently attested that Toshiba financial statements containing material misstatements were free from material misstatement. The regulator also commenced proceedings for a ¥2.111 billion administrative monetary penalty against the audit firm.
2014
5 November 2014 — PwC / Luxembourg Leaks tax scandal
PwC | Luxembourg / Global
The International Consortium of Investigative Journalists (ICIJ) and its media partners exposed hundreds of confidential tax agreements negotiated between multinational companies and Luxembourg authorities. The investigation, known as LuxLeaks, revealed how PwC had helped major corporations secure arrangements that allowed substantial profits to be taxed at exceptionally low rates in Luxembourg.
The leaked documents included 548 confidential tax rulings, involving more than 350 companies, including major international businesses. Many arrangements involved complex financing structures, intellectual-property transactions and intragroup payments designed to reduce corporate tax liabilities.
The revelations prompted international controversy over aggressive corporate tax planning, the role of professional-services firms and Luxembourg’s tax regime. Although the arrangements disclosed were generally legal under Luxembourg law, they raised questions about the distinction between legal tax avoidance and the shifting of profits away from jurisdictions where economic activity occurred.
The scandal also led to criminal proceedings against former PwC Luxembourg employees Antoine Deltour and Raphaël Halet, who had disclosed confidential documents. Their cases became a prominent test of whistleblower protections in Europe.
25 February 2014 — EY / Kaloti gold-assurance scandal
EY | United Arab Emirates / United Kingdom
An investigation by Global Witness and the BBC exposed serious concerns about EY’s assurance work for Kaloti, one of Dubai’s largest gold refiners. EY’s inspection team, led by partner Amjad Rihan, had identified extensive cash transactions, weaknesses in the verification of gold supplies and transactions involving gold smuggled from Morocco.
The findings included approximately US$5.2 billion in cash transactions during 2012 and raised concerns about potential money laundering and the sourcing of gold from conflict-affected regions.
Rihan alleged that EY’s management had allowed the most serious findings to be obscured in public reports after Dubai’s commodities regulator changed its reporting requirements. EY disputed the allegations, maintaining that it had acted professionally and that the deficiencies had been appropriately addressed.
Rihan subsequently brought legal proceedings against EY entities in the United Kingdom, alleging that the firm’s response to his disclosures had forced him from his career. In April 2020, the High Court ruled substantially in his favour on his negligence claim and awarded approximately US$11 million in damages.
The judgment in Rihan v Ernst & Young exposed serious failures in EY’s handling of the assurance engagement and its treatment of a partner who challenged the firm’s response.
2013
22 October 2013 — Deloitte sanctioned for employing a suspended auditor
Deloitte | United States
The US Public Company Accounting Oversight Board (PCAOB) fined Deloitte & Touche US$2 million for allowing a suspended former partner to continue performing work connected with public-company audits — the largest monetary sanction the PCAOB had imposed on an accounting firm at that time.
The regulator found that Deloitte had retained the individual as a salaried director in its national office despite a suspension prohibiting him from associating with a PCAOB-registered accounting firm. He subsequently participated in developing audit policies and guidance and in consultations with public-company audit teams.
The PCAOB censured Deloitte and required remedial measures to prevent similar violations. The firm settled without admitting or denying the regulator’s findings.
29 July 2013 — PwC / Quinn Insurance audit-negligence lawsuit
PwC | Ireland
PricewaterhouseCoopers faced a major audit-negligence lawsuit following the collapse of Quinn Insurance, one of Ireland’s largest general insurers, which was placed into administration in 2010.
The company’s administrators alleged that PwC had failed to identify serious deficiencies in the insurer’s claims reserves and regulatory returns during its audits covering 2005 to 2008. They argued that the firm’s failures had allowed Quinn Insurance to continue operating without sufficient reserves to meet its obligations to policyholders.
The administrators commenced proceedings in February 2012, and the case became public in July 2013 when it was admitted to Ireland’s Commercial Court. The claim ultimately sought approximately €900 million in damages, making it one of the largest professional-negligence actions against an auditor in Irish history.
The litigation continued for nearly a decade, including multiple appeals over procedural and funding issues. PwC denied negligence and contested the allegations.
In June 2022, the parties reached a settlement without a judicial determination of the underlying negligence claims. Details subsequently disclosed in April 2023 indicated that PwC had agreed to pay approximately €53 million, although other reporting described the inclusive settlement amount as €54 million.
The settlement brought the long-running litigation to an end. It did not constitute a court finding that PwC had been negligent.
24 June 2013 — EY / Zungui Haixi audit scandal
EY | Canada / China
The Ontario Securities Commission brought proceedings against Ernst & Young over its audits of Zungui Haixi Corporation, a Canadian-listed footwear company whose operations were principally in China.
The controversy had begun in August 2011, when EY suspended its audit after identifying irregularities involving bank confirmations, purported distributor payments and supporting documents. Zungui’s shares fell more than 75% following the announcement.
In June 2013, Ontario securities regulators alleged serious deficiencies in EY’s earlier audit work. These included failures to obtain sufficient audit evidence, respond appropriately to indications of potentially fictitious distributors and suppliers, exercise professional scepticism and review audit documentation adequately.
In September 2014, EY entered a C$1.5 million regulatory settlement covering the Zungui audits. This comprised a C$900,000 voluntary payment and C$600,000 in investigation costs. A separate C$2 million shareholder settlement had been approved in August 2013.
EY neither admitted nor denied the regulator’s facts and conclusions. Commission staff stated that they had found no evidence of dishonest conduct by EY and acknowledged that the firm’s escalation of concerns during the 2011 audit had helped expose Zungui’s financial-reporting irregularities.
17 June 2013 — KPMG / Co-operative Bank audit scandal
KPMG | United Kingdom
The Co-operative Bank disclosed a £1.5 billion capital shortfall following a review of its financial position, triggering a major restructuring and raising questions about its accounting practices, financial controls and earlier merger with Britannia Building Society.
KPMG had audited the bank’s financial statements, including those for 2009, when the Britannia merger took place. In January 2014, the Financial Reporting Council opened an investigation into the preparation, approval and audit of the bank’s financial statements up to December 2012.
In May 2019, the FRC announced sanctions against KPMG and audit partner Andrew Walker following their admission of misconduct concerning the 2009 audit. The deficiencies included failures to obtain sufficient appropriate audit evidence, exercise sufficient professional skepticism and address inadequate financial-statement disclosures.
KPMG was fined £4 million, after a settlement discount, and severely reprimanded. Walker was fined £100,000, also after a settlement discount, and severely reprimanded. KPMG also agreed to additional reviews of certain banking audit engagements.
The case exposed significant weaknesses in the audit of accounting judgments associated with a major banking merger.
1 March 2013 — EY US tax-shelter scandal
EY | United States
Ernst & Young admitted wrongful conduct by certain partners and employees in connection with four tax-shelter products marketed to wealthy clients between 1999 and 2004.
The schemes, known as COBRA, CDS, CDS Add-On and PICO, were used by approximately 200 EY clients in attempts to defer, reduce or eliminate more than US$2 billion in tax liabilities. According to US prosecutors, the arrangements involved preplanned transactions presented as genuine investments, alongside misleading records and representations intended to withstand Internal Revenue Service scrutiny.
In March 2013, EY entered a US$123 million non-prosecution agreement with the Department of Justice. The firm acknowledged a detailed statement of facts admitting wrongful conduct by certain personnel and agreed to permanent restrictions on its tax practice, including a prohibition on promoting specified tax-avoidance transactions.
The agreement also required continued cooperation with the authorities. In exchange, prosecutors agreed not to pursue criminal charges against the firm for the covered conduct, subject to compliance with the agreement.
The resolution was not a criminal conviction of EY, and the non-prosecution agreement did not protect individuals from prosecution.
2012
20 November 2012 — Deloitte / Autonomy accounting scandal
Deloitte | United Kingdom / United States
Hewlett-Packard announced an US$8.8 billion writedown following its acquisition of British software company Autonomy, alleging that serious accounting irregularities and misrepresentations had inflated the company’s financial performance before the takeover.
Autonomy’s financial statements had been audited by Deloitte, while KPMG had undertaken due diligence work for HP. Questions were asked about why the alleged irregularities had not been identified during the audit and acquisition processes. Deloitte defended its audit work and denied knowledge of the alleged accounting misconduct.
The UK’s Financial Reporting Council subsequently investigated Deloitte’s audits of Autonomy for 2009–2011. In September 2020, an independent disciplinary tribunal imposed a £15 million penalty on Deloitte after finding serious and extensive professional misconduct. Two former audit partners were also sanctioned.
The findings concerned failures to challenge the company’s accounting treatment of hardware sales and transactions with value-added resellers, alongside misleading communications with the regulator. The tribunal found that Deloitte had repeatedly failed to discharge its professional responsibilities.
The case became one of the most significant UK audit-enforcement proceedings of the period, involving a major technology acquisition, disputed financial reporting and serious findings against an external auditor.
6 August 2012 — Deloitte / Standard Chartered sanctions-compliance scandal
Deloitte | United States / United Kingdom
New York financial regulators accused Standard Chartered of concealing transactions involving Iranian customers and other parties subject to US sanctions. The allegations also drew attention to Deloitte Financial Advisory Services, which had been engaged to conduct an independent review of the bank’s anti-money-laundering controls.
In June 2013, the New York State Department of Financial Services announced a US$10 million settlement with Deloitte. The regulator found that Deloitte had compromised its independence during the engagement, including by removing a recommendation from its report after consulting with the bank. It also found that a senior Deloitte employee had improperly disclosed confidential supervisory information concerning other financial institutions.
Deloitte agreed to suspend certain consulting work for institutions regulated by the department for one year and introduce safeguards designed to strengthen the independence of regulatory consultants.
8 February 2012 — EY / Medicis Pharmaceutical audit failures
EY | United States
The PCAOB fined Ernst & Young US$2 million over serious audit failures involving Medicis Pharmaceutical Corporation, a longstanding audit client. Four current and former EY partners were also sanctioned.
The violations concerned EY’s audits of Medicis’s 2005–2007 financial statements, particularly its treatment of reserves for returned pharmaceutical products. The regulator found that EY accepted an accounting treatment that valued many expected returns at replacement cost rather than gross sales price, despite evidence contradicting that approach.
An internal quality review had challenged the accounting methodology, but EY personnel failed to resolve the underlying problem adequately. The PCAOB concluded that the auditors had failed to exercise sufficient professional skepticism.
The US$2 million penalty was the largest monetary sanction imposed by the PCAOB at the time. EY was censured, two partners were barred subject to later eligibility to petition for reinstatement, and two others were censured. The respondents settled without admitting or denying the findings.
2011
14 September 2011 — EY / Anglo Irish Bank audit investigation
EY | Ireland
An independent investigation into Ernst & Young’s audits of Anglo Irish Bank concluded that the firm had a prima facie disciplinary case to answer concerning its work on the bank’s financial statements.
The investigation followed revelations surrounding loans to former Anglo Irish Bank chairman Seán FitzPatrick, including arrangements through which loans were transferred between financial institutions around reporting dates.
In September 2011, special investigator John Purcell identified three matters giving rise to a prima facie disciplinary case against EY. These concerned the firm’s failure to detect the scale and systematic year-end refinancing of former chairman Seán FitzPatrick’s loans and their inadequate disclosure; its failure to address transactions between Anglo Irish Bank and Irish Life & Permanent in its audit report on the first set of Anglo’s 2008 financial statements; and its failure to ensure appropriate disclosure of a loan to director William McAteer.
The investigator found no prima facie case against EY on four other matters examined. The findings were preliminary, and did not constitute a final disciplinary determination against the firm.
The findings followed an earlier unsuccessful attempt by EY to halt the investigation through the Irish courts.
EY strongly disputed the investigator’s conclusions and emphasised that the proceedings were preliminary and that no adverse finding had been made against the firm. The prima facie determination was not a final disciplinary judgment.
8 September 2011 — Deloitte and the Big Four China audit-workpaper dispute
Deloitte, PwC, EY and KPMG | China / United States
The US Securities and Exchange Commission publicly challenged Deloitte’s Shanghai firm for failing to produce documents concerning its former audit client Longtop Financial Technologies. Deloitte had resigned after discovering indications of financial fraud and warned that investors should no longer rely on its earlier audit reports. The SEC said the firm’s failure to comply with a subpoena prevented access to evidence critical to its investigation.
The dispute widened in December 2012, when the SEC brought administrative proceedings against the Chinese affiliates of all four Big Four firms and another accounting firm over withheld audit documents. The firms’ position involved restrictions under Chinese law on providing documents directly to foreign regulators.
In February 2015, Deloitte, EY, KPMG and PwC each agreed to pay US$500,000 and were censured. They admitted that documents had not been produced before the 2012 proceedings, while neither admitting nor denying the other findings. The settlement established procedures for future document requests and potential further sanctions for non-compliance.
18 July 2011 — Olympus accounting scandal raises questions about KPMG and EY audits
KPMG / EY | Japan
Japanese financial magazine FACTA began exposing questionable acquisition transactions at Olympus, setting in motion a scandal that ultimately revealed nearly two decades of concealed investment losses. The controversy intensified in October when chief executive Michael Woodford was dismissed after challenging substantial acquisition payments.
On 8 November 2011, Olympus admitted that acquisition-related transactions had been used to conceal longstanding investment losses. The revelations raised questions about the company’s external auditors. KPMG’s Japanese member firm, Azsa, had audited Olympus until 2009, when EY’s Japanese member firm, ShinNihon, succeeded it.
KPMG had previously challenged aspects of Olympus’s accounting, particularly transactions involving three domestic acquisitions and the British medical-equipment company Gyrus. However, neither audit firm uncovered the wider scheme used to conceal losses.
In January 2012, an Olympus-appointed investigation into the auditors’ conduct concluded that neither KPMG nor EY had breached its legal duties. The panel acknowledged limitations in its investigation, including restrictions on access to certain audit working papers. Its conclusions did not amount to a judicial determination of every aspect of the firms’ audit work.
The scandal raised questions about professional skepticism, the investigation of unusual transactions and the responsibilities of successive auditors when major accounting irregularities remain undetected.
2 June 2011 — EY / Sino-Forest accounting scandal
EY | Canada / China
Canadian-listed forestry company Sino-Forest became embroiled in a major accounting scandal after short-selling research firm Muddy Waters published allegations that the company had substantially overstated its timber assets and financial performance in China.
The allegations caused a sharp decline in Sino-Forest’s share price and prompted investigations into the reliability of its financial statements. EY had audited the company since 2007.
The Ontario Securities Commission subsequently examined EY’s audit work and identified serious deficiencies, particularly in obtaining sufficient independent evidence concerning the company’s operations, assets and transactions in China.
In 2014, EY reached an agreement with the Ontario Securities Commission, including a C$8 million voluntary payment covering the Sino-Forest and Zungui Haixi audit proceedings.
EY settled without admitting or denying the facts or conclusions stated by regulatory staff. Staff said they had found no evidence of dishonest conduct by EY. Separately, EY agreed to substantial payments to resolve shareholder litigation concerning its audits of the two companies.
3 March 2011 — Deloitte / Aero Inventory audit scandal
Deloitte | United Kingdom
The UK’s accounting disciplinary authority opened an investigation into Deloitte’s audits of Aero Inventory, an aircraft-parts supplier that had entered administration in November 2009. The investigation examined Deloitte’s audit work on the company’s financial statements, including the valuation and existence of inventory.
In November 2016, an independent disciplinary tribunal found all three misconduct allegations against Deloitte and audit partner John Clennett proved. The findings concerned accounting and disclosure of a major transaction, the treatment of costs of sales and inventory valuations, and deficiencies in verifying whether inventory existed.
The FRC imposed a £4 million fine on Deloitte, then its largest fine against an accounting firm, and a £150,000 fine on Clennett. Both were severely reprimanded, and Deloitte was ordered to pay the costs of the disciplinary proceedings.
2010
4 August 2010 — Deloitte senior partner insider-trading scandal
Deloitte | United States
The US Securities and Exchange Commission charged former Deloitte & Touche partner Thomas Flanagan and his son with insider trading involving confidential information obtained through Deloitte’s engagements with major corporate clients.
Flanagan, who had spent 38 years at Deloitte and risen to vice chairman of Clients and Markets, allegedly used non-public information concerning earnings announcements, financial forecasts and acquisitions to trade securities. The SEC alleged that he generated more than US$430,000 in illegal trading profits and passed information to his son, who made additional profits exceeding US$57,000.
In separate administrative proceedings, the SEC found that Flanagan had violated auditor-independence rules on 71 occasions between 2003 and 2008 through securities transactions involving nine Deloitte audit clients.
Flanagan and his son agreed to pay more than US$1.1 million to settle the SEC’s civil charges. In August 2012, Flanagan pleaded guilty to criminal securities fraud.
11 March 2010 — EY / Lehman Brothers Repo 105 scandal
EY | United States
A court-appointed bankruptcy examiner investigating the collapse of Lehman Brothers published a report exposing the investment bank’s use of accounting transactions known as Repo 105 to temporarily remove tens of billions of dollars in assets from its balance sheet around financial reporting dates.
The report, prepared by Anton Valukas, concluded that Lehman had used the transactions to present a misleading picture of its financial position. It examined the role of Ernst & Young, Lehman’s external auditor, including the firm’s failure to alert the board’s audit committee to concerns raised by senior executive Matthew Lee about the company’s accounting practices.
The examiner identified potential claims against EY arising from its audit work and its handling of the whistleblower’s disclosures. EY disputed allegations of wrongdoing, maintaining that Lehman’s financial statements complied with applicable accounting standards and that its collapse resulted from extraordinary market conditions.
The revelations triggered litigation and renewed scrutiny of the responsibilities of auditors in the global financial crisis. The examiner’s conclusions did not themselves establish legal liability against EY.
2009
17 December 2009 — EY / Bally Total Fitness audit scandal
EY | United States
The US Securities and Exchange Commission charged Ernst & Young and six current and former partners over audit failures involving Bally Total Fitness, finding that the firm knew or should have known about fraudulent accounting and misleading financial disclosures at the US health-club operator.
EY had issued unqualified opinions on Bally’s financial statements for 2001–2003. The SEC found that these opinions were false and misleading and that the auditors had failed to respond appropriately to evidence of accounting irregularities.
EY agreed to pay US$8.5 million to settle the charges. The proceedings also involved six partners, including three members of the firm’s national office, highlighting deficiencies extending beyond the engagement team.
September 2009 — EY / Akai Holdings audit-document scandal
EY | Hong Kong
Ernst & Young Hong Kong became embroiled in allegations concerning the integrity of audit documentation during a major negligence lawsuit brought by the liquidators of Akai Holdings, the collapsed consumer-electronics group.
The liquidators had pursued EY over its audit work, seeking substantial compensation for alleged professional negligence. During proceedings in September 2009, they alleged that more than 80 documents produced by the firm had been altered or fabricated.
EY denied allegations that it had falsified documents or breached its audit obligations. However, the firm acknowledged that an internal investigation had established that certain documents relating to the 1998 and 1999 audits could no longer be relied upon because of actions attributed to an audit manager in early 2000. EY suspended the partner concerned pending further inquiries.
In September 2009, EY agreed to make a substantial payment to resolve the liquidators’ negligence claim. The settlement amount was not publicly disclosed.
The case was notable because the controversy extended beyond alleged deficiencies in professional judgment to questions about the authenticity and reliability of documents produced in litigation.
4 September 2009 — EY / Sons of Gwalia audit-negligence settlement
EY | Australia
Ernst & Young agreed to a A$125 million settlement relating to its audits of Sons of Gwalia, the Australian mining company that collapsed in 2004.
The company’s administrators, Ferrier Hodgson, had pursued claims against EY concerning alleged professional negligence in the accounting treatment of the company’s gold and foreign-exchange hedging arrangements.
In September 2009, the administrators announced a A$125 million settlement with EY, adding to a separate A$53 million settlement previously reached with former company directors and their insurers.
The combined A$178 million was expected to provide substantial recoveries for creditors in the long-running administration.
The settlement resolved claims concerning EY’s audit work but did not, by itself, constitute a judicial finding of negligence. The public reporting reviewed does not establish an admission of liability by EY.
August 2009 — PwC / Colonial Bank audit-negligence case
PwC | United States
Colonial Bank failed on 14 August 2009 amid a fraud involving mortgage lender Taylor, Bean & Whitaker and fictitious or double-pledged mortgage assets. PwC audited Colonial Bank; Deloitte separately audited Taylor, Bean & Whitaker.
The Federal Deposit Insurance Corporation, acting as Colonial’s receiver, pursued professional negligence claims against PwC over its audits of the bank. On 28 December 2017, a US district court held PwC liable for professional negligence. The court subsequently awarded damages on 2 July 2018.
On 15 March 2019, the FDIC announced a US$335 million settlement with PwC over the Colonial Bank audits. The settlement followed a judicial finding of negligence and was separate from the government’s claims concerning Deloitte’s audits of Taylor, Bean & Whitaker.
August 2009 — Deloitte / Taylor, Bean & Whitaker audit case
Deloitte | United States
Mortgage lender Taylor, Bean & Whitaker collapsed in August 2009 after a fraud involving fictitious or double-pledged mortgage loans and misleading financial records. Deloitte audited the lender’s financial statements for the fiscal years 2002–2008. The fraud also involved Colonial Bank, whose external auditor was PwC.
The US government alleged that Deloitte’s audits knowingly departed from applicable auditing standards and failed to detect the lender’s fraudulent conduct and materially misleading accounts. According to the allegations, Deloitte’s audit reports enabled the lender to continue originating mortgages insured by the Federal Housing Administration.
On 28 February 2018, Deloitte agreed to a US$149.5 million settlement over its Taylor, Bean & Whitaker audits, resolving potential False Claims Act liability. The claims were settled allegations, with no determination of Deloitte’s liability.
20 February 2009 — PwC / Cattles and Welcome Finance accounting scandal
PwC | United Kingdom
Subprime lender Cattles delayed publication of its annual results after concerns emerged over loan impairment at its principal subsidiary, Welcome Financial Services. PwC had refused to sign off the 2008 annual report. In April 2009, Cattles announced that it needed approximately £700 million in additional provisions.
The Financial Services Authority subsequently found that Cattles had published misleading information about the quality of Welcome’s loan book. The business had used payment deferments that concealed the extent of contractual arrears and made its lending appear healthier than it was.
In August 2016, PwC and audit partner Simon Bradburn admitted misconduct concerning the 2007 Cattles and Welcome audits. They had issued unqualified opinions without sufficient evidence concerning loan-loss provisions and failed to identify inadequate disclosures about the impairment policy and financial instruments.
PwC received a £3.5 million fine, reduced to £2.3 million after mitigation and settlement, a severe reprimand and a £750,000 costs contribution. Bradburn was separately fined and reprimanded.
7 January 2009 — PwC / Satyam accounting scandal
PwC | India
Indian technology company Satyam Computer Services became engulfed in a massive accounting scandal when its chairman, B. Ramalinga Raju, confessed that the company’s financial statements had been falsified over several years. The fraud involved fictitious cash balances, overstated assets and other accounting irregularities.
Satyam’s financial statements had been audited by Price Waterhouse, Bangalore, a PwC-affiliated firm. Subsequent regulatory investigations uncovered serious deficiencies in the audit process, particularly the procedures used to verify the company’s reported cash balances.
In April 2011, the PCAOB sanctioned five India-based PwC firms, imposing a US$1.5 million penalty jointly and severally on Price Waterhouse, Bangalore and Lovelock & Lewes.
The regulator found that the auditors had allowed Satyam’s management to control the bank-confirmation process, including sending requests and returning purported bank responses. The deficient procedures failed to expose the company’s substantial overstatement of cash and bank balances.
The firms agreed to sanctions and remedial measures without admitting or denying the PCAOB’s findings. Separately, the US Securities and Exchange Commission imposed US$6 million in penalties on five PwC India affiliates.
The Satyam scandal became one of India’s most significant corporate accounting frauds, exposing weaknesses in audit evidence, professional skepticism and quality control.
2008
5 August 2008 — EY commercial relationship breaches auditor-independence rules
EY | United States
The US Securities and Exchange Commission sanctioned Ernst & Young LLP over a business relationship with Mark C. Thompson, an outside director of three publicly traded companies audited by EY.
Between October 2002 and May 2004, EY and Thompson worked together on audio publications intended to support business development. Throughout the relevant period, Thompson held directorships at three EY audit clients and, for part of that period, served on one client’s audit committee.
The SEC concluded that this commercial arrangement compromised EY’s independence in relation to all three audit clients. The regulator also identified failures within EY to address the conflicts, including the decision to proceed with the arrangement despite personnel being aware that Thompson served on the boards of audit clients.
The SEC auditor-independence enforcement action resulted in EY being censured and ordered to pay approximately US$2.92 million in disgorgement and prejudgment interest. Two EY partners were separately censured.
EY settled without admitting or denying the SEC’s findings, except with respect to jurisdiction.
2007
10 December 2007 — Deloitte / Ligand Pharmaceuticals audit failures
Deloitte | United States
The PCAOB fined Deloitte & Touche US$1 million for violations of auditing standards in its 2003 audit of Ligand Pharmaceuticals. Former Deloitte audit partner James Fazio was also sanctioned.
The regulator found that Deloitte had failed to perform adequate audit procedures concerning revenue recognition and estimates of product returns. Ligand subsequently restated its financial statements, reducing reported 2003 product revenue by approximately US$59 million.
The PCAOB also identified serious concerns about Deloitte’s quality controls. Firm management had been aware of deficiencies in Fazio’s ability to lead public-company audits but had allowed him to continue without implementing sufficient safeguards.
Deloitte was censured and required to implement additional quality-control measures. Fazio was barred from association with a PCAOB-registered accounting firm, with the right to petition for reinstatement after two years. The respondents settled without admitting or denying the findings.
7 February 2007 — KPMG / New Century accounting scandal
KPMG | United States
US subprime mortgage lender New Century announced that it would restate its financial results for the first three quarters of 2006 after discovering errors in its accounting for loan-repurchase losses. The company said previously reported earnings would be reduced and that investors should no longer rely on the affected financial statements.
The disclosures preceded New Century’s bankruptcy and extensive scrutiny of its accounting, lending practices and audit work. Investors brought securities claims against the company’s officers, its auditor KPMG and other defendants, alleging misleading reporting about financial performance, mortgage-related risks and internal controls.
The bankruptcy examiner’s report, released publicly in March 2008, further examined the practices that contributed to the lender’s collapse. The investor litigation continued after the court substantially rejected defendants’ dismissal motions.
KPMG subsequently agreed to contribute US$44.75 million to the New Century shareholder settlement, which received final approval in November 2010. The negotiated settlement resolved the investor claims against the firm; it was not a trial finding establishing every allegation.
2006
30 March 2006 — KPMG / Tenet Healthcare audit-document alteration scandal
KPMG | United States
The US Securities and Exchange Commission sanctioned three former KPMG auditors for improper alterations to audit working papers relating to Tenet Healthcare Corporation’s 2002 financial statements.
The SEC found that the audit team had failed to complete important procedures before issuing its audit report, particularly concerning Medicare payments. After questions emerged about Tenet’s accounting and pricing practices, the auditors began modifying the audit files to make it appear that the necessary work had been completed.
According to the regulator, the team spent more than 500 hours altering over 350 working papers. Some changes were made after KPMG had received an SEC subpoena. The misconduct included backdating documents and creating audit evidence after the fact.
Former engagement partner Clete Madden, senior manager David Huffman and manager Aron Carr were sanctioned. Their settlements restricted their ability to practice before the SEC, with two eligible to apply for reinstatement after specified periods. They settled without admitting or denying the SEC’s findings.
2005
29 September 2005 — KPMG US audit-quality inspection failures
KPMG | United States
The US Public Company Accounting Oversight Board published an inspection report identifying significant deficiencies in KPMG LLP’s audits of publicly traded companies.
The regulator examined 76 engagements and identified deficiencies in 18, including failures to detect departures from generally accepted accounting principles and obtain sufficient appropriate audit evidence. In one engagement, the auditor failed to identify improper accounting for a sale-and-leaseback transaction, resulting in the omission of assets and related debt from the client’s balance sheet.
The inspection findings raised serious questions about audit quality at one of the largest US accounting firms. At least one audited company subsequently restated previously reported financial results after deficiencies were identified.
The report was published one month after KPMG admitted criminal wrongdoing in connection with its US tax-shelter business and agreed to pay US$456 million under a deferred prosecution agreement.
11 July 2005 — PwC / US government travel-expense overbilling scandal
PwC | United States
PricewaterhouseCoopers agreed to pay US$41.9 million to resolve US government allegations that it had improperly overcharged federal agencies for travel expenses incurred while providing auditing and consulting services.
The allegations originated in a whistleblower lawsuit brought by former PwC partner Neal Roberts. Federal authorities alleged that PwC had received rebates, commissions and other financial incentives from airlines, hotels, car-rental companies, credit-card providers and travel suppliers without consistently passing those savings on to government clients.
According to the US Department of Justice’s settlement announcement, the alleged conduct covered the period from July 1990 to June 2003 and involved contracts with numerous federal agencies.
The Justice Department stated that PwC had paid US$41.9 million without admitting wrongdoing. The firm also agreed to pay US$1.625 million towards the whistleblower’s legal fees and costs.
The case highlighted the potential conflicts inherent in professional-services firms’ commercial billing arrangements, particularly where supplier incentives reduce costs that are subsequently charged to clients.
2004
22 September 2004 — KPMG / Fannie Mae accounting scandal
KPMG | United States
Fannie Mae publicly disclosed serious findings by its regulator, the Office of Federal Housing Enterprise Oversight, concerning its accounting policies and practices. The regulator identified accounting that did not comply with US generally accepted accounting principles, weaknesses in internal controls and practices that prioritised stable reported earnings over accurate financial disclosure.
The findings included improper accounting for derivatives and hedging activities and the use of reserves to manage reported results. KPMG was Fannie Mae’s external auditor during the period subsequently challenged in shareholder litigation.
Investors alleged that misleading financial statements and earnings manipulation had inflated the value of Fannie Mae’s securities. The consolidated litigation named KPMG alongside the company and other defendants.
In 2013, KPMG agreed to contribute US$76.5 million to a shareholder settlement. Fannie Mae agreed to contribute the same amount, bringing the combined settlement to US$153 million. The court-approved resolution settled the securities claims; it did not constitute a trial verdict establishing KPMG’s liability for all the alleged misconduct.
11 May 2004 — PwC / Warnaco misleading audit-reporting scandal
PwC | United States
The US Securities and Exchange Commission initiated proceedings against PricewaterhouseCoopers concerning misleading disclosures associated with a US$145 million inventory restatement by clothing manufacturer Warnaco.
In April 1999, Warnaco filed restated financial statements for 1998 and earlier periods after substantial inventory accounting errors had been identified. PwC had recognized serious weaknesses in Warnaco’s inventory accounting and had insisted that the company correct its financial statements. However, the firm accepted management’s explanation attributing the adjustments to previously deferred start-up costs.
According to the SEC, PwC repeated this misleading description in its audit report despite knowing that the restatement was attributable to accounting errors and deficient inventory controls. Although Warnaco corrected the reported financial amounts, the accompanying explanation failed to disclose the true nature of the accounting problems.
In May 2004, PwC agreed to resolve the SEC’s Warnaco proceedings, consenting to a proposed US$2.4 million civil penalty and a censure. The monetary settlement remained subject to court approval.
PwC agreed to settle without admitting or denying the allegations.
2003
19 December 2003 — Deloitte / Parmalat accounting scandal
Deloitte | Italy
Italian dairy group Parmalat disclosed that approximately €3.95 billion supposedly held in a Bank of America account by its Cayman Islands subsidiary Bonlat did not exist. The revelation exposed one of Europe’s largest accounting frauds and led to Parmalat’s collapse into insolvency days later.
Deloitte had served as Parmalat’s principal group auditor since 1999, while Grant Thornton’s Italian affiliate audited certain subsidiaries, including Bonlat. Investigations and subsequent litigation raised questions about how the auditors had assessed the group’s financial statements, confirmed cash balances and evaluated transactions involving overseas subsidiaries.
In August 2004, Parmalat’s administrator brought a multibillion-dollar lawsuit against Deloitte and Grant Thornton, alleging that the auditors had failed to uncover extensive accounting fraud and financial irregularities.
In January 2007, Deloitte-related entities agreed to a settlement valued at approximately US$150 million to resolve claims brought by Parmalat. The settlement did not constitute a judicial finding that Deloitte had knowingly participated in the fraud.
16 November 2003 — KPMG US tax-shelter fraud scandal
KPMG | United States
A US Senate investigation exposed KPMG’s role in developing and aggressively marketing tax shelters designed to generate artificial losses for wealthy clients. The Senate Permanent Subcommittee on Investigations examined how KPMG and other professional-services firms had turned complex tax-avoidance arrangements into highly profitable commercial products, despite serious internal warnings about their legitimacy.
The investigation revealed that KPMG had marketed shelters known as FLIP, OPIS, BLIPS and SC2, with internal communications showing intense pressure to generate sales. Former KPMG personnel testified about the firm’s practices, while Senate investigators examined internal documents revealing concerns among the firm’s own tax professionals.
In August 2005, KPMG admitted criminal wrongdoing and agreed to pay US$456 million under a deferred prosecution agreement with the US Department of Justice. The firm acknowledged participating in a fraud that generated at least US$11 billion in fictitious tax losses, which prosecutors said had cost the US Treasury at least US$2.5 billion in evaded taxes.
The Justice Department said the misconduct had been approved and carried out at the highest levels of KPMG’s tax management, despite warnings that the shelters were legally indefensible. The settlement required substantial changes to the firm’s tax practice, cooperation with criminal investigations and independent oversight. Several former senior KPMG executives and partners faced criminal charges.
The agreement allowed KPMG to avoid immediate prosecution, an outcome that attracted particular attention following the collapse of Arthur Andersen in 2002.
25 September 2003 — EY / NextCard audit-document destruction scandal
EY | United States
The US Securities and Exchange Commission opened proceedings against former EY audit partner Thomas Trauger and audit manager Michael Mullen over allegations that audit working papers for NextCard, a credit-card company, had been altered or destroyed.
The misconduct followed regulatory concerns about NextCard’s accounting for loan losses and securitized receivables. The SEC alleged that Trauger directed colleagues to alter the completed audit files to make it appear that EY had properly evaluated the company’s financial reporting. The modified documents were subsequently provided to regulators investigating NextCard.
The case resulted in criminal convictions. Trauger pleaded guilty to withholding information about the alterations during an SEC investigation and was sentenced to 12 months in federal prison in February 2005. Mullen pleaded guilty to concealing material information from an FBI investigator and received probation.
22 May 2003 — PwC / SmarTalk audit and working-paper scandal
PwC | United States
The US Securities and Exchange Commission sanctioned PricewaterhouseCoopers for deficiencies in its audit of SmarTalk, a prepaid telephone-card company, and for subsequent changes to audit working papers that had not been properly documented.
SmarTalk had incorrectly recorded a US$25 million restructuring reserve in its 1997 accounts and charged operating expenses against that reserve, thereby overstating earnings before exceptional charges. The problems became public in August 1998, and the company subsequently restated its financial statements.
The SEC determined that PwC had failed to meet applicable professional auditing standards. It also found that, during an internal review in July and August 1998, personnel had altered documentation relating to an already completed audit without identifying the changes. Working papers were added, removed or discarded without appropriate records showing that these actions had occurred after completion of the audit.
The SEC’s SmarTalk enforcement action against PwC resulted in a censure, an undertaking to pay US$1 million to the US Treasury and requirements to strengthen audit-documentation procedures and undergo an independent review.
PwC settled without admitting or denying the SEC’s findings, apart from admissions concerning jurisdiction.
19 March 2003 — EY / HealthSouth accounting scandal
EY | United States
The US Securities and Exchange Commission publicly alleged that healthcare provider HealthSouth had systematically overstated earnings by at least US$1.4 billion since 1999. The alleged manipulation inflated both earnings and assets to meet market expectations. Trading in the company’s securities was suspended as the scandal became public.
HealthSouth’s external auditor, Ernst & Young, subsequently faced investor litigation alleging that its audit work had helped conceal the company’s true financial condition. Those allegations against the auditor were distinct from the criminal proceedings involving HealthSouth personnel.
In June 2009, the court approved a US$109 million settlement with EY in the stockholder litigation. In April 2010, representatives of a separate bondholder class announced that EY had agreed to a US$33.5 million bondholder settlement, then subject to court approval.
The two settlements concerned different investor classes. They resolved civil claims against EY and should not be presented as criminal findings against the audit firm.
2002
20 November 2002 — KPMG / Finance Credit audit scandal
KPMG | Norway
KPMG came under scrutiny following the collapse of Finance Credit, a Norwegian finance group whose founders had used fictitious transactions and manipulated financial statements to obtain substantial loans from banks and other lenders.
The scandal became public in November 2002, when Norwegian authorities began investigating the group’s operations and creditors questioned how its financial irregularities had escaped detection. KPMG, which had audited companies within the group since 1999, faced criticism over its audit work and the reliability of financial statements on which lenders had relied.
Norway’s financial supervisory authority investigated KPMG’s role, while affected banks considered legal proceedings against the firm.
Subsequent criminal proceedings identified serious audit deficiencies, including inadequate examination of related-party transactions, unsupported receivables and other material financial statement items. The responsible KPMG engagement partner, John Haukland, was convicted of violations of Norwegian auditing legislation.
KPMG also reached an out-of-court settlement with creditors of Finance Credit, reportedly agreeing to pay NOK 347.3 million in compensation.
On 26 June 2008, Norway’s Supreme Court imposed a NOK 5 million criminal fine on KPMG for deficient audit work. The court emphasised the fundamental importance of statutory auditing to the credibility of financial reporting and the serious consequences of the failures in this case.
The judgment established corporate criminal responsibility for KPMG, notwithstanding its earlier acquittals in the lower courts.
13 November 2002 — EY / PeopleSoft auditor-independence scandal
EY | United States
The US Securities and Exchange Commission brought proceedings against Ernst & Young over its independence as auditor of PeopleSoft, a business-software company, alleging that the firm’s commercial relationship with the client had compromised its ability to perform independent audits.
EY had audited PeopleSoft while simultaneously maintaining extensive business relationships involving the development, marketing and implementation of PeopleSoft-related software. The arrangements included joint marketing activities, consulting services and a software product incorporating PeopleSoft technology.
In April 2004, an SEC administrative law judge found that EY had violated auditor-independence requirements in connection with its audits of PeopleSoft’s financial statements for 1994–1999. The judge ordered a six-month suspension from accepting new SEC-registrant audit clients and required EY to engage an independent consultant to review its compliance procedures.
12 September 2002 — PwC / Tyco International accounting scandal
PwC | United States
The US Securities and Exchange Commission charged former Tyco International executives, including chief executive Dennis Kozlowski and chief financial officer Mark Swartz, with securities fraud involving undisclosed executive loans, unauthorized compensation and transactions concealed from investors. The revelations formed part of a widening accounting and corporate-governance scandal at the industrial conglomerate.
PwC had audited Tyco throughout the period under scrutiny. In August 2003, the SEC permanently barred former PwC engagement partner Richard Scalzo from practicing before the Commission as an accountant, finding that he had recklessly violated federal securities-law antifraud provisions and engaged in improper professional conduct.
The regulator found that Scalzo had encountered numerous warning signs concerning the integrity of Tyco’s senior management but failed to respond with the necessary professional skepticism. He settled without admitting or denying the SEC’s findings.
In 2007, PwC agreed to pay US$225 million to settle shareholder litigation arising from the accounting scandal, without admitting liability.
August 2002 — KPMG / Gemstar-TV Guide accounting scandal
KPMG | United States
Gemstar-TV Guide came under scrutiny following revelations of improper revenue recognition involving licensing and advertising arrangements. The accounting problems led to financial restatements and concerns about the effectiveness of KPMG’s audits.
Gemstar had recognized licensing revenue in circumstances where contracts had not been executed or payments depended on unresolved negotiations or legal disputes. Other revenue had been recognized over inappropriate accounting periods or without adequate evidence supporting the amounts recorded.
KPMG had served as Gemstar’s auditor since 1993. The SEC subsequently found that the firm’s auditors had relied repeatedly on management representations despite evidence that contradicted those explanations, and had failed to demonstrate sufficient professional skepticism. The regulator also identified weaknesses in the way information emerging from Gemstar’s 2002 accounting investigation was handled and escalated.
On 20 October 2004, the SEC sanctioned KPMG and four auditors over the Gemstar audits. KPMG was censured and agreed to pay US$10 million to compensate affected Gemstar shareholders. At the time, this represented the largest payment by an accounting firm in an SEC enforcement proceeding. Four individual auditors were also subjected to restrictions on their ability to practice before the SEC.
KPMG and the individuals settled without admitting or denying the SEC’s findings.
18 July 2002 — EY / AOL Time Warner accounting scandal
EY | United States
Reporting raised questions about AOL’s advertising-revenue accounting, triggering scrutiny of its financial reporting and auditor, Ernst & Young.
The controversy centred on transactions used to recognise advertising revenue during a period of weakening demand. Subsequent investigations examined whether some receipts should have been accounted for differently, including payments connected with AOL’s acquisition of Bertelsmann’s interest in AOL Europe.
Shareholder litigation followed, with EY named as a defendant alongside the company and others. The auditor’s role became part of the wider dispute over allegedly misleading financial statements and disclosures.
EY ultimately contributed US$100 million to the AOL Time Warner securities settlement. Time Warner’s filing confirms that EY paid that amount and that the court granted final approval of the settlement on 6 April 2006. EY’s contribution was separate from Time Warner’s US$2.4 billion contribution and the company’s regulatory payments. The civil settlement did not itself establish every allegation against EY.
17 July 2002 — PwC auditor-independence scandal
PwC | United States
The US Securities and Exchange Commission sanctioned PricewaterhouseCoopers and its securities affiliate for widespread auditor-independence violations involving 16 public-company audit clients between 1996 and 2001.
The regulator found that PwC and its predecessor Coopers & Lybrand had entered into prohibited contingent-fee arrangements with 14 audit clients while providing investment-banking services. In two additional cases, involving Pinnacle Holdings and Avon Products, PwC had participated in improper accounting for costs that included its own consulting fees.
The SEC concluded that the independence violations had caused 16 clients to file financial statements that did not comply with federal securities-reporting requirements.
PwC and its securities affiliate agreed to pay a combined US$5 million. The SEC imposed US$2.75 million in monetary relief on PwC and US$2.25 million on its securities affiliate. PwC was censured and required to undertake remedial measures to strengthen compliance with auditor-independence requirements.
27 June 2002 — EY Netherlands / Baan auditor-independence scandal
EY | Netherlands / United States
The US Securities and Exchange Commission fined Moret Ernst & Young Accountants US$400,000 after finding that the Dutch accounting firm had violated auditor-independence rules through commercial relationships with its audit client Baan, a Netherlands-based business-software company.
Moret audited Baan’s financial statements for 1995–1997 while its consulting operations participated in joint business arrangements with the company. These included software-development projects, coordinated marketing and implementation services for third parties.
The SEC found that Moret’s consultants had billed approximately US$1.9 million to Baan through the arrangements. The regulator also found that the firm’s independence had been further compromised by its reliance on audit work performed by an affiliated US EY firm that itself lacked independence from Baan.
Moret was censured, fined US$400,000 and required to implement remedial measures. It settled without admitting or denying the findings.
The SEC described the case as its first auditor-independence enforcement action against a foreign accounting firm and the first involving a civil monetary penalty imposed on an audit firm for an independence violation.
11 April 2002 — KPMG / Xerox accounting scandal
KPMG | United States
The US Securities and Exchange Commission charged Xerox with accounting fraud, alleging that the company had manipulated its financial statements to inflate reported revenues and earnings. The misconduct included accelerating revenue from equipment leases and using accounting adjustments to meet Wall Street expectations.
KPMG had audited Xerox throughout the period. In January 2003, the SEC charged KPMG and four partners with fraud, alleging that the auditors had permitted Xerox to use improper accounting practices despite repeated warnings.
The SEC alleged that KPMG partners had failed to challenge Xerox’s accounting treatment adequately and had continued to issue unqualified audit opinions on materially misstated financial statements.
The regulator found that the misconduct had enabled Xerox to overstate equipment revenues by approximately US$3 billion and earnings by approximately US$1.5 billion over four years. In April 2005, KPMG agreed to pay US$22.475 million to settle the SEC’s charges.
27 March 2002 — Deloitte / Adelphia accounting scandal
Deloitte | United States
US cable television company Adelphia Communications disclosed approximately US$2.3 billion in off-balance-sheet debt associated with entities controlled by its founding Rigas family, triggering a major accounting scandal. Subsequent investigations revealed extensive financial misconduct, including concealed liabilities, inflated financial results and the use of corporate funds for personal purposes.
Deloitte had audited Adelphia’s financial statements. Although the firm had identified Adelphia as a particularly high-risk client, the US Securities and Exchange Commission subsequently found that Deloitte had failed to design and perform audit procedures appropriate to those risks.
In April 2005, the SEC announced a US$50 million settlement with Deloitte over improper professional conduct in its audit of Adelphia’s 2000 financial statements. The regulator found that Deloitte had failed to respond adequately to evidence of related-party transactions, concealed liabilities and questionable accounting practices.
Deloitte agreed to the financial penalty and substantial changes to its audit procedures, including greater use of forensic specialists on high-risk engagements. The firm settled without admitting or denying the SEC’s findings and allegations.
2001
16 October 2001 — Enron accounting scandal and the collapse of Arthur Andersen
Arthur Andersen | United States
US energy company Enron announced a US$1.01 billion after-tax charge and a reduction of approximately US$1.2 billion in shareholders’ equity, bringing serious questions about its accounting practices into public view. The disclosures marked the beginning of a crisis that culminated in Enron’s bankruptcy on 2 December 2001 and the destruction of Arthur Andersen, one of the world’s largest accounting firms.
Andersen had audited Enron for 16 years and earned substantial fees from audit, consulting and tax services. Its auditors had become closely integrated with the company’s operations, while concerns about Enron’s accounting had been raised within Andersen before the collapse.
As regulatory scrutiny intensified in October 2001, Andersen personnel began destroying Enron-related documents and deleting emails. The destruction continued after the Securities and Exchange Commission opened an investigation and stopped following the service of a subpoena.
In June 2002, Andersen was convicted of obstruction of justice. The firm subsequently ceased auditing US public companies, and its clients and personnel dispersed among competitors. The conviction was unanimously overturned by the US Supreme Court in May 2005 because of defective jury instructions, but the firm had already collapsed.
The scandal accelerated the introduction of the Sarbanes-Oxley Act, the establishment of the PCAOB and restrictions on the non-audit services accounting firms could provide to audit clients.
Andersen’s demise reduced the Big Five to the Big Four, fundamentally reshaping the global audit market.
Explore the cases behind the timeline
This timeline provides the chronology. The Big4News Cases & Fines database provides individual case files covering regulatory sanctions, disciplinary findings, court proceedings and settlements involving Deloitte, PwC, EY and KPMG, with links to the underlying sources.
For a closer examination of how individual scandals unfolded, explore the PwC Evergrande scandal timeline and the KPMG Australia scandal timeline, or browse all Big Four scandal timelines.
Sources, corrections and updates
This is a living research resource. Entries distinguish allegations from established findings and incorporate subsequent judgments, settlements and other significant developments. Read the Big4News editorial approach for our standards on sourcing, verification, independence and corrections.
To suggest a missing case, submit a correction or provide documentary evidence, contact big4news@claudinecassar.com. Please identify the relevant entry and include supporting sources where available.
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About Claudine Cassar
I’m a corporate anthropologist and former Deloitte equity partner. I sold my technology business to Deloitte in 2016 and led the Malta Consulting team for five years. I am the founder and editor of Big4News, which provides independent, clear analysis of PwC, Deloitte, EY, and KPMG — free from corporate spin.
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