The Dutch Authority for Financial Markets (AFM) has levied a €765,000 ($897,399) administrative fine on BDO Audit & Assurance after uncovering internal exam fraud.

The fine comes after it was found that BDO’s quality control mechanisms and business operations did not prevent or detect examination misconduct involving answer sharing and collaboration between employees.

Investigations revealed that professionals at BDO, across all levels from junior staff to partners, collaborated or shared answers during internal examinations.

This activity was identified over a period spanning 2018 to 2023.

The AFM determined that there were no adequate policies or controls in place at BDO to ensure the integrity of these assessments.

The AFM concluded that the absence of proper preventative and detection measures represented shortcomings in both general business operations and specific quality control systems at BDO.

According to the AFM, these violations are particularly serious, given that audit firms are responsible for providing assurance on companies’ annual reports. As such, it is essential that the credibility of an audit firm remains unquestionable. In light of this, the imposition of a fine is ‘appropriate’.

The audit firm accepted the fine, worked with authorities during the inquiry and has started to implement new steps to reduce future risks.

In June, the Public Company Accounting Oversight Board (PCAOB) imposed a combined $8.5m penalty on Dutch member firms of Deloitte, PwC, and EY for similar internal exam violations.

Parallel investigations by both the PCAOB and the AFM resulted in intensive supervision measures being imposed by the AFM to deter future breaches. 

In October, Forvis Mazars also faced a fine from the AFM due to exam-related breaches.