Ernst & Young to Pay $100 Million Penalty for Employees Cheating on CPA Ethics Exams and Misleading Investigation

Largest Penalty Ever Imposed by SEC Against an Audit Firm

FOR IMMEDIATE RELEASE

2022-114

Washington D.C., June 28, 2022 —

The Securities and Exchange Commission today charged Ernst & Young LLP (EY) for cheating by its audit professionals on exams required to obtain and maintain Certified Public Accountant (CPA) licenses, and for withholding evidence of this misconduct from the SEC’s Enforcement Division during the Division’s investigation of the matter. EY admits the facts underlying the SEC’s charges and agrees to pay a $100 million penalty and undertake extensive remedial measures to fix the firm’s ethical issues.

“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,” said Gurbir S. Grewal, Director of the SEC’s Enforcement Division. “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 admits 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.

EY further admits 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 admits 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.

The entire press release is here.

Abuse case reveals therapist’s dark past, raises ethical concerns

Associated Press

Originally posted 11 JUN 22

Here is an excerpt:

Dushame held a valid driver’s license despite five previous drunken driving convictions, and it was his third fatal crash — though the others didn’t involve alcohol. The Boston Globe called him “the most notorious drunk driver in New England history.”

But over time, he dedicated himself to helping people recovering from addiction, earning a master’s degree in counseling psychology and leading treatment programs from behind bars.

Two years later, he legally changed his name to Peter Stone. He was released from prison in 2002 and eventually set up shop as a licensed drug and alcohol counselor.

Last July, he was charged with five counts of aggravated felonious sexual assault under a law that criminalizes any sexual contact between patients and their therapists or health care providers. Such behavior also is prohibited by the American Psychological Association’s ethical code of conduct.

In a recent interview, the 61-year-old woman said she developed romantic feelings for Stone about six months after he began treating her for anxiety, depression and alcohol abuse in June 2013. Though he told her a relationship would be unethical, he initiated sexual contact in February 2016, she said.

“‘That crossed the line,’” the woman remembers him saying after he pulled up his pants. “‘When am I seeing you again?’”

While about half the states have no restrictions on name changes after felony convictions, 15 have bans or temporary waiting periods for those convicted of certain crimes, according to the ACLU in Illinois, which has one of the most restrictive laws.

Stone appropriately disclosed his criminal record on licensing applications and other documents, according to a review of records obtained by the AP. Disclosure to clients isn’t mandatory, said Gary Goodnough, who teaches counseling ethics at Plymouth State University. But he believes clients have a right to know about some convictions, including vehicular homicide.

The info is here.

You Think Failure Is Hard? So Is Learning From It

Eskreis-Winkler, L., & Fishbach, A. (2022).

Perspectives on Psychological Science. 

https://doi.org/10.1177/17456916211059817

Abstract

Society celebrates failure as a teachable moment. But do people actually learn from failure? Although lay wisdom suggests people should, a review of the research suggests that this is hard. We present a unifying framework that points to emotional and cognitive barriers that make learning from failure difficult. Emotions undermine learning because people find failure ego-threatening. People tend to look away from failure and not pay attention to it to protect their egos. Cognitively, people also struggle because the information in failure is less direct than the information in success and thus harder to extract. Beyond identifying barriers, this framework suggests inroads by which barriers might be addressed. Finally, we explore implications. We outline what, exactly, people miss out on when they overlook the information in failure. We find that the information in failure is often high-quality information that can be used to predict success.

Conclusion

From a young age, we are told that there is information in failure, and we ought to learn from it. Yet, people struggle to see the information in failure. As a result, they struggle to learn.  We present a unifying framework that identifies the emotional and cognitive barriers that make it difficult for people to learn from failure.

Understanding these barriers is especially important when one considers the information in failure. The information in failure is both rich and unique—indeed it is often richer, more informative, and more useful than the information in success.

What to do in a world where the information in failure is rich, yet people struggle to see it? One recommendation is to explore the solutions that we propose here. Remove the ego from failure, shore up the ego so it can tolerate failure, and ease the cognitive burdens of learning from failure to promote it in practice and through culture. We believe such techniques are well worth understanding and investing in, since there is so much to learn from the information in failure when we see it.

The research is here.

Confidence in U.S. Supreme Court Sinks to Historic Low

Jeffrey Jones

Gallup.com

Originally posted 23 JUN 22

Story Highlights

• 25% of Americans have confidence in Supreme Court, down from 36% in 2021
• Current reading is five percentage points lower than prior record low
• Confidence is down among Democrats and independents this year

With the U.S. Supreme Court expected to overturn the 1973 Roe v. Wade decision before the end of its 2021-2022 term, Americans' confidence in the court has dropped sharply over the past year and reached a new low in Gallup's nearly 50-year trend. Twenty-five percent of U.S. adults say they have "a great deal" or "quite a lot" of confidence in the U.S. Supreme Court, down from 36% a year ago and five percentage points lower than the previous low recorded in 2014.

These results are based on a June 1-20 Gallup poll that included Gallup's annual update on confidence in U.S. institutions. The survey was completed before the end of the court's term and before it issued its major rulings for that term. Many institutions have suffered a decline in confidence this year, but the 11-point drop in confidence in the Supreme Court is roughly double what it is for most institutions that experienced a decline. Gallup will release the remainder of the confidence in institutions results in early July.

The Supreme Court is likely to issue a ruling in the Dobbs v. Jackson Women's Health Organization case before its summer recess. The decision will determine the constitutionality of a Mississippi law that would ban most abortions after 15 weeks of pregnancy. A leaked draft majority opinion in the case suggests that the high court will not only allow the Mississippi law to stand, but also overturn Roe v. Wade, the 1973 court ruling that prohibits restrictions on abortion during the first trimester of pregnancy. Americans oppose overturning Roe by a nearly 2-to-1 margin.

In September, Gallup found the Supreme Court's job approval rating at a new low and public trust in the judicial branch of the federal government down sharply. These changes occurred after the Supreme Court declined to block a Texas law banning most abortions after six weeks of pregnancy, among other controversial decisions at that time. Given these prior results, it is unclear if the drop in confidence in the Supreme Court measured in the current poll is related to the anticipated Dobbs decision or had occurred several months before the leak.

The info is here.

What drives mass shooters? Grievance, despair, and anger are more likely triggers than mental illness, experts say

Deanna Pan

Boston Globe

Originally posted 3 JUN 22

Here is an excerpt:

A 2018 study by the FBI’s Behavioral Analysis Unit evaluating 63 active shooters between 2000 and 2013 found that a quarter were known to have been diagnosed with any kind of mental illness, and just 3 of the 63 had a verified psychotic disorder.

Although 62 percent of shooters showed signs that they were struggling with issues like depression, anxiety, or paranoia, their symptoms, the study notes, may ultimately have been “transient manifestations of behaviors and moods” that would not qualify them for a formal diagnosis.

Formally diagnosed mental illness, the study concludes, “is not a very specific predictor of violence of any type, let alone targeted violence,” given that roughly half of the US population experiences symptoms of mental illness over the course of their lifetimes.

Forensic psychologist Jillian Peterson, cofounder of The Violence Project, a think tank dedicated to reducing violence, said mass shooters are typically younger men, channeling their pain and anger through acts of violence and aggression. For many mass shooters, Peterson said, their path to violence begins with early childhood trauma. They often share a sense of “entitlement,” she said — to wealth, power, romance, and success. When they don’t achieve those goals, they become enraged and search for a scapegoat.

”As they get older, you see a lot of despair, hopelessness, self-hate — many of them attempt suicide — isolation. And then that kind of despair, isolation, that self-hatred turns outward,” Peterson said. “School shooters blame their schools. Some people blame a racial group or women or a religious group or the workplace.”

But mental illness, she said, is rarely an exclusive motive for mass shooters. In a study published last year, Peterson and her colleagues analyzed a dataset of 172 mass shooters for signs of psychosis — features of schizophrenia and other mood disorders. Although mental illness and psychotic disorders were overrepresented among the mass shooters they studied, Peterson’s study found most mass shooters were motivated by other factors, such as interpersonal conflicts, relationship problems, or a desire for fame.

Peterson’s study found psychotic symptoms, such as delusions or hallucinations, played no role in almost 70 percent of cases, and only a minor role in 11 percent of cases, where the shooters had other motives. In just 10 percent of cases, perpetrators were directly responding to their delusions or hallucinations when they were planning and committing their attacks.

Here is the info.

Work group rituals enhance the meaning of work

T. Kima, O. Sezer, et al.

Organizational Behavior and 

Human Decision Processes

Volume 165, July 2021, Pages 197-212

Abstract

The many benefits of finding meaning in work suggest the importance of identifying activities that increase job meaningfulness. The current paper identifies one such activity: engaging in rituals with workgroups. Five studies (N = 1,099) provide evidence that performing group rituals can enhance the meaningfulness of work, and that in turn this meaning can enhance organizational citizenship behaviors (to the benefit of those groups). We first define group rituals both conceptually and empirically, identifying three types of features associated with group rituals—physical actions, psychological import, and communality—and differentiating group rituals from the related concept of group norms (Pilot Studies A and B). We then examine—correlationally in a survey of employed individuals (Study 1a) and experimentally in a study that manipulates the presence or absence of the three types of ritualistic features (Study 1b)—whether performing an activity at work with ritualistic physical, psychological, and communal features (versus an activity with none or just one of these features) is associated with more meaningful work experiences. We test whether this enhanced meaning predicts the extent to which individuals are willing to engage in behaviors enacted on behalf of that group, even without the promise of reward, using organizational citizenship behaviors in Studies 1a–1b and performance on a brainstorming task in Study 2. Taken together, these studies offer a framework for understanding group ritual and offer novel insight into the downstream consequences of employing group rituals in organizational contexts.

Highlights

• Physical, psychological, and communal elements capture group ritual’s core meaning.

• Organizations can employ group rituals to imbue tasks with meaning.

• This meaning can, in turn, enhance organizational citizenship behaviors.

Conclusion

Group rituals are prevalent in countless contexts, from sporting events to religious services to workplaces. Our findings not only suggest that there may be wisdom behind their ubiquity, but also that groups can engineer group activities to increase the success of meaning transfer. A series of ritualistic movements can become a simple—yet effective—tool for enhancing meaning at work. 

A pdf of the research is here.

Leaders with Multicultural Experiences Communicate and Lead More Effectively, Especially in Multinational Teams

J. G. Lu, R. I. Swaab, A. D. Galinsky

Organization Science

Published Online: 22 Jul 2021

Abstract

In an era of globalization, it is commonly assumed that multicultural experiences foster leadership effectiveness. However, little research has systematically tested this assumption. We develop a theoretical perspective that articulates how and when multicultural experiences increase leadership effectiveness. We hypothesize that broad multicultural experiences increase individuals’ leadership effectiveness by developing their communication competence. Because communication competence is particularly important for leading teams that are more multinational, we further hypothesize that individuals with broader multicultural experiences are particularly effective when leading more versus less multinational teams. Four studies test our theory using mixed methods (field survey, archival panel, field experiments) and diverse populations (corporate managers, soccer managers, hackathon leaders) in different countries (Australia, Britain, China, America). In Study 1, corporate managers with broader multicultural experiences were rated as more effective leaders, an effect mediated by communication competence. Analyzing a 25-year archival panel of English Premier League soccer managers, Study 2 replicates the positive effect of broad multicultural experiences using a team performance measure of leadership effectiveness. Importantly, this effect was moderated by team national diversity: soccer managers with broader multicultural experiences were particularly effective when leading teams with greater national diversity. Study 3 (digital health hackathon) and Study 4 (COVID-19 policy hackathon) replicate these effects in two field experiments, in which individuals with varying levels of multicultural experiences were randomly assigned to lead hackathon teams that naturally varied in national diversity. Overall, our research suggests that broad multicultural experiences help leaders communicate more competently and lead more effectively, especially when leading multinational teams.

From the Discussion

Practical Implications

Because of the rise of globalization, individuals and organizations increasingly value and invest in multicultural experiences. However, multicultural experiences are expensive. The present research lends support to the common belief that multicultural experiences foster leadership effectiveness (Karabell 2016, Pelos 2017). Notably, our studies consistently found that the breadth (but not the depth) of multicultural experiences predicted leadership effectiveness via communication competence. This finding suggests that organizations should ensure that expatriates are exposed to a broad set of experiences. For example, when structuring international assignments, organizations should consider exposing their employees to a range of foreign postings (e.g., global rotation programs) rather than one lengthy foreign posting (Suutari and Makel ¨ a¨ 2007). Similarly, individuals may consider pursuing multinational educational programs (e.g., global MBA) that allow them to engage with different cultures.

Just as individuals’ multicultural experiences are increasingly prevalent, so are multinational teams. The

present research examined three multinational team contexts with high ecological validity and real-world

consequences. Across these contexts, we provide evidence that multinational teams perform better when

led by leaders with broad multicultural experiences.

The research is here.

Thousands of Medical Professionals Urge Supreme Court To Uphold Roe: ‘Provide Patients With the Treatment They Need’

Phoebe Kolbert

Ms. Magazine

Originally posted 21 JUN 22

Any day now, the Supreme Court will issue its decision in Dobbs v. Jackson Women’s Health Organization, which many predict will overturn or severely gut Roe v. Wade. Since the start of the Dobbs v. Jackson hearings in December, medical professionals have warned of the drastic health impacts brought on by abortion bans. Now, over 2,500 healthcare professionals from all 50 states have signed a letter urging the Supreme Court to scrap their leaked Dobbs draft opinion and uphold Roe.  

Within 30 days of a decision to overturn Roe, at least 26 states will ban abortion. Clinics in remaining pro-abortion states are preparing for increased violence from anti-abortion extremists and an influx of out-of-state patients. The number of legal abortions performed nationwide is projected to fall by about 13 percent. Many abortion clinics in states with bans will be forced to close their doors, if they haven’t already. The loss of these clinics also comes with the loss of the other essential reproductive healthcare they provide, including STI screenings and treatment, birth control and cervical cancer screenings.

The letter, titled “Medical Professionals Urge Supreme Court to Uphold Roe v. Wade, Protect Abortion Access,” argues that decisions around pregnancy and abortion should be made by patients and their doctors, not the courts.

The info from Ms. Magazine is here.

Here is how the letter begins:

Medical Professionals Urge Supreme Court to Uphold Roe v. Wade, Protect Abortion Access

As physicians and health care professionals, we are gravely concerned that the U.S. Supreme Court appears prepared to end the constitutional right to an abortion. We urge the Supreme Court to to scrap their draft opinion, uphold the constitutional right to an abortion, and ensure that abortions remain legal nationwide, as allowed for in Roe v. Wade. In this moment of crisis, we want to make crystal clear the consequences to our patients’ health if they can no longer access abortions.

Abortions are safe, common and a critical part of health care and reproductive medicine. Medical professionals and medical associations agree, including the American Medical Association, the American College of Obstetricians and Gynecologists, the American Academy of Family Physicians, the American College of Nurse Midwives and many others.

Prohibiting access to safe and legal abortion has devastating implications for health care. Striking down Roe v. Wade would affect not just abortion access, but also maternal care as well as fertility treatments. Pregnancy changes a person’s physiology. These changes can potentially worsen existing diseases and medical conditions.

As physicians and medical professionals, we see the real-life consequences when an individual does not get the care that they know they need, including abortions. The woman who has suffered the violation and trauma of rape would be forced to carry a pregnancy.

Denying access to abortion from people who want one can adversely affect their health, safety and economic well-being, including delayed separation from a violent partner and increased likelihood of falling into poverty by four times. These outcomes can also have drastic impacts on their health.

The entire letter is here.

South Carolina bill permits health care providers refuse non-emergency care based on beliefs

Brooke Migdon

The Hill

Originally posted 1 APR 22

Story at a glance

• Legislators in South Carolina on Friday passed a bill which would allow healthcare providers to deny care based on their personal beliefs. It would also apply to insurance companies, which may be entitled to refuse to pay for care.

• The bill would also protect those who decline to provide medical services from civil, criminal or administrative liability.

• Some say the bill, known as the “Medical Ethics and Diversity Act,” would disproportionately affect the LGBTQ+ community, as well as women and people of color.

South Carolina lawmakers on Friday passed a bill allowing medical professionals and insurance companies to deny care based on personal belief. Some say the legislation, which now heads to the state Senate for consideration, would disproportionately impact LGBTQ+ people, women, and people of color.

Under the bill, titled the “Medical Ethics and Diversity Act,” South Carolina law would be altered to excuse medical practitioners, health care institutions and health care payers from providing care that violates their “conscience.” It would also shield those who decline to provide medical services to patients from civil, criminal or administrative liability.

Dozens of state residents in February testified against the bill, calling it vague and overbroad. They also shared concerns that the legislation would disproportionately impact marginalized communities.

In a statement on Friday, Human Rights Campaign Legal Director Sarah Warbelow said she finds it “disturbing” that politicians in South Carolina are prioritizing individual providers’ beliefs over the wellbeing of patients.

“This legislation is dangerously silent in regards to the needs of patients and fails to consider the impact that expanding refusals can have on their health,” she said. “Religious freedom is a fundamental American value that is entirely compatible with providing quality, non-discriminatory healthcare. It is not a license to deprive others of their rights simply because of personal beliefs.”

Warbelow said the bill sends a message to patients with non-medical views inconsistent with that of their doctors that they are “not equal members of society entitled to dignity and respect.”

The info is here.

Editor's Note: Those politicians who pass laws based on culture wars are clearly violating the principle-based ethics on which all medical ethics rely.  If they pass harmful laws that conflict with health care ethics, then they are not fit to serve.