The firm was also penalised for withholding evidence of this misconduct from the Security and Exchange Commission (SEC).

The big four firm admitted the facts underlying the SEC’s charges and agreed to pay the penalty and undertake extensive remedial measures to fix the firm’s ethical issues.

Gurbir S. Grewal, director of the SEC’s enforcement division, said: “This action involves breaches of trust by gatekeepers within the gatekeeper entrusted to audit many of our Nation’s public companies.

“It’s simply outrageous that the very professionals responsible for catching cheating by clients cheated on ethics exams of all things. And it’s equally shocking that Ernst & Young hindered our investigation of this misconduct.

“This action should serve as a clear message that the SEC will not tolerate integrity failures by independent auditors who choose the easier wrong over the harder right.”

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

The firm further admitted that during the enforcement division’s investigation of potential cheating at the firm, EY made a submission conveying to the division that EY did not have current issues with cheating when, in fact, the firm had been informed of potential cheating on a CPA ethics exam. EY also admitted that it did not correct its submission even after it launched an internal investigation into cheating on CPA ethics and other exams and confirmed there had been cheating, and even after its senior lawyers discussed the matter with members of the firm’s senior management. And as the order finds, EY did not cooperate in the SEC’s investigation regarding its materially misleading submission.

In addition to paying a $100m (£82m) penalty, the order requires EY to engage in extensive undertakings, including retaining two separate independent consultants to help remediate its deficiencies. One consultant will review the firm’s policies and procedures relating to ethics and integrity. The other will review EY’s conduct regarding its disclosure failures, including whether any EY employees contributed to the firm’s failure to correct its misleading submission.

Melissa R. Hodgman, associate director of the SEC’s enforcement division, said: “The SEC will not permit the submission of misleading information or any action that delays or frustrates our mandate to protect investors and our markets.

“Ernst & Young faces significant sanctions and extensive remediation to ensure that its culture and conduct meet the ethical standards required of those responsible for the integrity of our capital markets.”

EY was found to have violated a Public Company Accounting Oversight Board (PCAOB) rule requiring the firm to maintain integrity in the performance of a professional service, committed acts discreditable to the accounting profession, and failed to maintain an appropriate system of quality control. EY has admitted the facts underlying these findings and acknowledged that its conduct violated the integrity standard and provides a basis for the SEC to impose remedies against the firm pursuant to sections 4C(a)(2) and (a)(3) of the exchange act and rules 102(e)(1)(ii) and (iii) of the commission’s rules of practice.

EY has commented: “Nothing is more important than our integrity and our ethics. We are confident the outcomes of the undertakings will reinforce steps we have already taken in the years since these situations occurred.

“Sharing answers on any assessment or exam is a violation of our code of conduct and is not tolerated at EY.”