PCAOB Takes Action Against PwC Israel Over Widespread Exam Misconduct

Key Takeaways

• PCAOB Fines PwC Israel: PwC Israel (Kesselman & Kesselman C.P.A.s), a part of the global PricewaterhouseCoopers network, has been fined $2.75 million and censured for allowing answer sharing and unauthorized access during internal training exams.
• Misconduct Spanned Five Years: Between 2017 and 2022, hundreds of PwC Israel employees engaged in dishonest practices related to critical training exams meant to uphold U.S. auditing standards and ethics.
• PCAOB’s No-Tolerance Stance: This marks the 11th firm penalized by the PCAOB for similar misconduct since 2021, highlighting a growing trend in accountability for integrity violations in training processes.
• Integrity in Auditing: PCAOB Chair Erica Y. Williams emphasized that firms must uphold the highest ethical standards in all practices, including training, to prevent risks to investors and public trust.
• Required Corrective Measures: PwC Israel must overhaul its internal policies, ensuring that future training exams meet ethical standards, with the firm required to report back to the PCAOB on its corrective actions within 150 days.

Deep Dive

The Public Company Accounting Oversight Board (PCAOB) has recently put its foot down on PwC Israel (Kesselman & Kesselman C.P.A.s) for a serious lapse in integrity that undermined professional standards. The firm, a member of the global PricewaterhouseCoopers network, has been slapped with a $2.75 million fine, a public censure, and a raft of corrective measures after it was found guilty of allowing improper answer sharing on internal training exams over a span of five years.

Between 2017 and 2022, hundreds of PwC Israel employees engaged in dishonest practices, either sharing answers or gaining unauthorized access to exam questions. These exams weren’t just any routine tests—they were critical training tools designed to ensure the firm’s personnel adhered to U.S. auditing standards, ethics, and professional independence. When those values are compromised—even in training—there’s a real risk to investors and the integrity of the broader financial system.

PCAOB Chair Erica Y. Williams didn’t mince words: “We will not tolerate cheating or unethical behavior at PCAOB-registered audit firms, whether they’re in the U.S. or abroad. Firms must uphold the highest standards, not just in their audits but also in their internal practices. Anything less puts investors and the public at risk.”

The misconduct was far from isolated. PwC Israel’s failure to detect and prevent this widespread cheating behavior is part of a growing trend that the PCAOB has been cracking down on. Since 2021, this marks the 11th firm penalized for similar quality control failures related to exam misconduct. In fact, the PCAOB has shown a clear, no-tolerance stance on integrity violations in the training space—a space that should be setting the standard, not failing to meet it.

Robert E. Rice, Director of the PCAOB’s Division of Enforcement and Investigations, weighed in, reinforcing the centrality of integrity in auditing. “When firms fail to hold their people to ethical standards—even in training—it erodes trust. Integrity is the foundation of effective auditing. Investors need to know they can rely on auditors to act with integrity every step of the way.”

PwC Israel, without admitting or denying the findings, agreed to settle with the PCAOB. The $2.75 million civil penalty will sting, but it’s not just the fine that will have a lasting impact. PwC Israel has also been required to overhaul its internal policies. The firm must now take concrete steps to ensure that future training exams are conducted ethically and with integrity, reporting back to the PCAOB within 150 days to show they've made meaningful changes.

It’s not just about the fine. It’s about setting an example. The rules for upholding integrity and professionalism remain unchanged, regardless of where a firm might operate. Whether it’s training or auditing, there’s no room for cutting corners. Get it right, or face the consequences.

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