Cheating in professional exams is still a “live” issue at the UK’s biggest audit firms, the accountancy watchdog warned. A string of multimillion dollar fines have already been issued to large auditing and accounting firms around the world over allegations of cheating in tests which underpin professional qualifications. A letter from the Financial Reporting Council (FRC), Britain’s accounting and auditing industry regulator, said its investigation into the issue had already uncovered instances of cheating at audit firms and professional bodies. These were found in some tier-one auditors, a category comprising the so-called Big Four accountants, KPMG, PwC, Deloitte and EY, along with Mazars, Grant Thornton and BDO. “The issues raised by exam cheating therefore remain live and the FRC’s consideration of them, and any further regulatory action needed in response to them, is ongoing,” the letter said, suggesting that companies could face fresh penalties. “The profession therefore needs to be vigilant and to seek to continually improve the processes and controls in place in this area. The profession must also strive to maintain a culture of integrity in which the highest standards of professional behaviour are upheld.” The letter referred to the test scams which caused the FRC’s US equivalent, the Public Company Accounting Oversight Board (PCAOB), to impose a fine of $2m (£1.66m) on KPMG’s UK arm this month. The PCAOB found that questions were shared before exams. Aside from the KPMG fine, the watchdog did not name other firms where it had uncovered cheating. Jon Holt, chief executive of KPMG, said he was disappointed by employees’ actions in a statement in response to the PCAOB findings. He said that the company “took the appropriate disciplinary action with all those involved and have since put additional monitoring measures in place”. In June, EY agreed to pay the US’ Securities and Exchange Commission (SEC) a record $100m after the SEC found professionals had cheated on an ethics exam and then tried to hide it from regulators. The firm said it was complying with the SEC’s order and had taken steps to address compliance issues. However, rather than name and shame where it had found failings in its review FRC said it was “communicating privately with firms” where it had “identified opportunities for improving their controls, policies, and procedures”. It is understood that this is because it is an ongoing investigation, and companies would only be named if the FRC took enforcement action that met a public interest test. It is not clear when the investigation might end. The FRC also found loopholes which could readily allow cheating. These included “the potential for organisations employing students studying for the audit qualification to become involved in the delivery of professional examinations”, and “an option was available to students to sit exams at their employers”. However, no evidence had yet emerged that these loopholes for potential cheating had been used, the FRC said. Cheating had been noted in assessments for those studying for apprenticeships delivered alongside professional qualifications, the FRC said. It would revise how these examinations were delivered, with a mind to preventing and detecting cheating, it said.