Category: News And Views

14 Drone food deliveries to take off soon? Swiggy and ANRA Technologies to launch trials

Swiggy may soon deliver food using drones, with trials to begin for both food and medical packages. Swiggy’s drone delivery partner, ANRA Technologies, has got final clearances from the Ministry of Defence, the Ministry of Civil Aviation and the Directorate-General of Civil Aviation to commence drone trials for delivering food. ANRA Technologies has got the clearances for Beyond Visual Line of Sight (BVLOS) operations. After a lot of planning, air traffic control integration and readying equipment, ANRA launched its first sortie on 16th June, 2021. For the next several weeks, its team will conduct BVLOS food and medical package delivery trials in Etah and Rupnagar districts in Uttar Pradesh and Punjab, respectively.

Apart from partnering Swiggy for food delivery, the integrated airspace management firm is also engaged in a similar project for which it has partnered with IIT, Ropar, and will focus on medical deliveries.

Amit Ganjoo, the founder and CEO of ANRA, said that the motivating factor for him and his team comes from knowing that ‘our technology may soon help deliver food and medical packages to underserved populations’.

In a test flight video, the ANRA team showed how the deliveries are likely to take place. A drone is seen in the almost-three-minute video picking a small food package, flying out to a certain distance, before returning to the ground and delivering the package.

A few weeks ago, Dunzo, the Google-backed delivery startup, had announced that it was set to pilot drone delivery of medicines under the ‘Medicine from the Sky’ project launched by the Telangana Government in collaboration with the World Economic Forum. The project is aimed to enable emergency medical deliveries that could include Covid-19 vaccines and other essentials. Dunzo is amongst the entities that were recently allowed by the Central Government to attempt BVLOS experimental flights using drones.

(Source: ndtv.com, dated 14th June, 2021)

15 Hyderabad market turns 10 tons of waste into biogas every day; powers 170 shops

When you think of vegetable and fruit markets in India, you ‘see’ messy visuals of vegetable shavings trampled on the ground, bustling crowds and bargaining vendors. The foul smell of leftover and damaged produce lying on the floor is not only unpleasant but also results in tonnes of waste at the end of the day.

But at the Bowenpally fruit and vegetable market in Hyderabad, the vegetable waste generated is used to power streetlights and shops. ‘Over the last six months, ten tonnes of waste that is generated daily is being converted into 500 units of electricity. It is used to power 120 streetlights, 170 shops and a cold storage unit,’ says Lokini Srinivas, Selection Grade Secretary, Bowenpally market.

‘Using the same waste, 30 kg. of biogas is produced through this process and is replacing LPG cooking gas in the canteen at the market,’ he explains, adding that the market uses 800 to 900 units of electricity every day and now 80% of the power supply is fulfilled with the biogas.

On the days when Bowenpally market does not generate ten tonnes of waste, neighbouring vegetable markets and supermarkets pitch in.

So how do they do it?

Converting waste into a resource
In an allocated space of 30 m x 40 m in the market, Hyderabad-based Ahuja Engineering Services Pvt Ltd., an organisation that has been involved in setting up biogas plants across India, has set up a unit that can process the ten tonnes of waste every day.

‘Though we have set up many plants across India, this is the first one with such a high capacity. The plant was set up under the guidance of Chief Scientist Dr. A. Gangagni Rao of the CSIR-IICT (Council of Scientific and Industrial Research – Indian Institute of Chemical Technology). Using his patented technology, we could set up a unit that could work at such a high rate capacity,’ says Sruthi Ahuja, Director of Ahuja Engineering.

She adds that the research using this technology has been going on since 2012.

Apart from producing electricity and biogas, the plant is also generating organic manure that can be used in farming.

Earlier, a model using the same technology but with a lower capacity of 250 kg. was installed at a poultry farm in Hyderabad where farm waste was converted into energy. Its success prompted Dr. Gangagni to engineer a system that could convert ten tonnes of waste every day into biogas.

‘The research at CSIR-IICT began in 2006 to find ways to produce biogas from vegetable, fruit and food waste. By 2011, we had developed a patented technology which was tested on a small scale at various farms and kitchens across India. We then re-engineered the method to make it more efficient so that it could handle the higher capacity of waste and produce more energy,’ says Dr. Gangagni.

The Department of Biotechnology picked up this project and provided capital investment to set up the plant. The Department of Agriculture Marketing also lent support and carried out the necessary civil work.

Every day, the waste is collected from across the Hyderabad market by a designated team hired on contract. This is brought to the plant located in the same premises and goes through a bio-methanation process.

First, the waste is shredded and then it is soaked in a feed preparation tank to be converted into slurry. This undergoes an anaerobic bio-methanation process using a special culture (bacteria consortium). Finally, the biogas is collected in separate tanks and directed to the kitchen for cooking. The biofuel is also supplied to a 100% biogas generator which is used to power water pumps, cold storage rooms, and street and shop lights.

Dr. Gangagni adds, ‘There are other markets where more biogas plants will be installed in future.’

(Source: betterindia.com, dated 15th June, 2021)

II. Health

16 More than half of the cosmetics sold in the US, Canada are full of toxins, finds study

Researchers at the University of Notre Dame tested more than 230 commonly used cosmetics and found that 56% of foundations and eye products, 48% of lip products and 47% of mascaras contained fluorine – an indicator of PFAS, or so-called ‘forever chemicals’ that are used in non-stick frying pans, rugs and countless other consumer products.

‘The Environmental Protection Agency is moving to collect industry data on PFAS chemical uses and health risks as it considers regulations to reduce potential risks caused by the chemicals.’

Some of the highest PFAS levels were found in waterproof mascara (82%) and long-lasting lipstick (62%), according to the study published in the journal Environmental Science & Technology Letters. Twenty-nine products with higher fluorine concentrations were tested further and found to contain between four and 13 specific PFAS chemicals, the study found. Only one item listed PFAS, or perfluoroalkyl and polyfluoroalkyl substances, as an ingredient on the label.

A spokeswoman for the US Food and Drug Administration, which regulates cosmetics, said the agency does not comment on specific studies. It said on its website that there have been few studies of the presence of the chemicals in cosmetics and the ones published generally found the concentration to be at very low levels not likely to harm people, in the parts per billion level to the 100s of parts per million.

A factsheet posted on the agency’s website says that ‘As the science on PFAS in cosmetics continues to advance, the FDA will continue to monitor’ voluntary data submitted by industry as well as published research.

But PFAS chemicals are an issue of increasing concern for lawmakers who are working to regulate their use in consumer products. The study results were announced as a bipartisan group of Senators introduced a bill to ban the use of PFAS in cosmetics and other beauty products.

The move to ban PFAS comes as Congress considers wide-ranging legislation to set a national drinking water standard for certain PFAS chemicals and clean up contaminated sites across the country, including military bases where high rates of PFAS have been discovered.

‘There is nothing safe and nothing good about PFAS,’’ said Senator Richard Blumenthal, D-Conn., who introduced the cosmetics bill with Sen. Susan Collins, R-Maine. ‘These chemicals are a menace hidden in plain sight that people literally display on their faces every day.’

Representative Debbie Dingell, D-Mich., who has sponsored several PFAS-related bills in the House, said she has looked for PFAS in her own makeup and lipstick, but could not see if they were present because the products were not properly labelled.

‘How do I know it doesn’t have PFAS?’ she asked at a news conference, referring to the eye makeup, foundation and lipstick she was wearing.

The Environmental Protection Agency is also moving to collect industry data on PFAS chemical uses and health risks as it considers regulations to reduce potential risks caused by the chemicals.

The Personal Care Products Council, a trade association representing the cosmetics industry, said in a statement that a small number of PFAS chemicals may be found as ingredients or at trace levels in products such as lotion, nail polish, eye makeup and foundation. The chemicals are used for product consistency and texture and are subject to safety requirements by the FDA, said Alexandra Kowcz, the Council’s Chief Scientist.

‘Our member companies take their responsibility for product safety and the trust families put in those products very seriously,’ she said, adding that the group supports prohibition of certain PFAS from use in cosmetics. ‘Science and safety are the foundation for everything we do.’

But Graham Peaslee, a Physics Professor at Notre Dame and the principal investigator of the study, said the cosmetics pose an immediate and long-term risk. ‘PFAS is a persistent chemical. When it gets into the bloodstream, it stays there and accumulates,’ he said.

Blumenthal, a former State Attorney-General and self-described ‘crusader’ on behalf of consumers, said he does not use cosmetics. But speaking on behalf of millions of cosmetics users, he said they have a message for the industry: ‘We’ve trusted you and you betrayed us.’

Brands that want to avoid likely government regulation should voluntarily go PFAS-free, Blumenthal said. ‘Aware and angry consumers are the most effective advocate for change’, he added.

(Source: firstpost.com, dated 18th June, 2021)

17 Should world stop shaking hands after Covid? What experts say

Banished at the start of the pandemic, the handshake is making something of a comeback, thanks to vaccinations and the lifting of social restrictions – but ‘pressing the flesh’ faces an uncertain future.

More than speeches or communiqués, one of the most striking takeaways from the Vladimir Putin and Joe Biden summit in Geneva was their fulsome handshake in front of the world’s cameras – a rare moment of physical human contact. A few days earlier, at the G7 summit in Cornwall, Biden and his fellow leaders were still elbow-bumping away at outdoor events spaced six feet apart.

Back in the US, most Covid-19 restrictions have been lifted and vaccinated citizens have been told they don’t need masks – even indoors. Social distancing is largely a thing of the past and unlimited domestic travel is back on. But many Americans are still treading carefully – mask-wearing is still encouraged in many shops and offices, friends often greet each other with a brief wave and handshakes are treated warily.

New York telephone technician Jesse Green declines to shake hands with customers, but does with people he knows and who have been vaccinated. ‘Because of the pandemic, people are more aware about the way they use their hands,’ he said. For William Martin, a 68-year-old lawyer, shaking hands with anyone, vaccinated or not, is out of the question. He won’t do so ‘until it is safe,’ he said, adding ‘and “safe” will not be determined by some government.’

Some US companies and organisations are using coloured bracelets to allow employees, customers or visitors to signal their openness to contact: red, yellow or green, from the most cautious to the most comfortable.

Hugging is generally out of bounds and kissing to greet someone – never common in the US – is almost unimaginable for most.

Unscientific?
Jack Caravanos, a Professor at New York University’s School of Global Public Health, said wariness of handshakes does not exactly match the evidence. Covid-19 ‘is poorly transmitted by surface contact and is essentially an airborne virus, (so) the scientific basis for no skin contact is moot,’ he says.

‘However, the common cold, influenza and a host of other infectious diseases are transmitted by touch, therefore eliminating handshaking will overall have a positive public health impact.’ Tapping into the wider health benefits, many experts would not mourn the death of the handshake.

‘I don’t think we should ever shake hands ever again, to be honest with you,’ White House pandemic adviser Anthony Fauci said last year as the virus took hold worldwide. Allen Furr, Professor of Sociology at Auburn University, said ‘We’ve always had germophobes, people who don’t like to touch people because they see everything as a contagion. We may have some more of those, because of the psychological effect that safety is equated with not coming close to people – that may stick in some people’s minds.’

A human ritual
Shaking hands is a ritual taught to children by adults, but after 16 traumatic months it is one that could weaken if it is not passed down to the next generation, he said.

Other forms of greeting such as fist-bumping, a brief wave, or alternatives such as an Indian-style ‘Namaste’ could become increasingly popular compared with the hearty grip of a ‘manly’ handshake. But ‘so much will be lost if we didn’t shake hands,’ mourns Patricia Napier-Fitzpatrick, founder of The Etiquette School of New York.

‘You can tell a lot about a person by their handshake. It’s part of body language – people have lost jobs in the past because of bad handshakes. When you touch someone, you’re showing you trust them, you’re saying “I’m not going to harm you”.’

As with everything, handshaking today has ‘become a political thing’, suggests New York paramedic Andy McCorkle, with some people shaking hands as a sign of defiance against the government and Covid restrictions. ‘I feel like it’ll be solidified psychologically, to keep one’s distance,’ he said.

The pandemic has upended many things about everyday life and the handshake is just one of them – the test will be to see if humans need it back. Furr, for his part, expects the handshake to endure. ‘It’s just kind of too important a ritual in our culture,’ he adds.

(Source: ndtv.com, dated 16th June, 2021)

III. World news

18 Taxing Amazon is like squeezing rice pudding

Around 100 years ago, the UK fumed as the wealthy Vestey brothers shifted their family business to Argentina to escape the long arm of London tax collectors. As the multinational used ever-more-elaborate schemes to shuffle profits, including creating a trust in Paris, the authorities likened attempts to tax the Vesteys to ‘trying to squeeze a rice pudding.’ The relevant loophole, which outraged the public, wasn’t closed until the 1990s.

Today’s rice-pudding squeezers have a new breed of multinationals in sight: Tech companies such as Amazon.com Inc. and Facebook Inc. that sell their services to consumers around the world yet pay little or nothing in tax.

Part of the problem is a global system rife with low-tax jurisdictions and smart advisers helping firms to devise ingenious Vestey-esque ways to pay as little as possible. But it’s also about the system’s failure to adapt to the digital age.

Corporate tax rules requiring a physical presence make it harder to tax businesses in the virtual world. The European Union recently estimated a 14-percentage-point gap in the tax rate between digital companies and bricks-and-mortar rivals.

Hence why, from a historical perspective, the G7 tax deal struck recently is such a big deal. Its minimum effective tax rate of 15% puts tax havens on notice. And its accompanying measure promises to tax the biggest multinationals above a certain threshold and reallocate the proceeds fairly around the world. This would supersede existing rules and allow countries a crack at collecting tax where they couldn’t before.

It’s taken decades of pressure, a financial crisis and a pandemic to get to a point where globalisation means tax convergence and not competition. Big countries found it relatively easy to ignore low-tax rivals when profits were on the up, but they now have little time for a race to the bottom on tax rates with climate change, inequality and pandemic management calling for more investment.

The playing field needs levelling: A country like Ireland (headline rate 12.5%) would stand to lose around two billion euros ($2.4 billion) in tax revenue, while France (headline rate 26.5%) would gain around five billion euros, according to national estimates.

As the G7 shops its initiative farther afield, not everyone is going to be happy. Ireland has made clear it intends to defend its way of doing things. Successive Irish governments have backed corporate tax as one of the few areas where Ireland can compete globally. U2 singer Bono has crooned that it gave his homeland ‘the only prosperity it’s ever known.’

Yet there’s real political momentum here and palpable public outrage. It’s one thing to build a national identity around a 12.5% tax rate. But last week, The Guardian reported that an Irish subsidiary of Microsoft Corp. paid zero corporation tax thanks to its residency in Bermuda. In 2014, Apple Inc. was estimated by the European Union to have paid a 0.005% tax rate. This is increasingly about corporate, not national, sovereignty.

The real risk is of future loopholes to come. Enforcement and tax collection will be a big part of making this deal stick: Listen hard and you can almost hear the cogs of wonkish brains whirring to spot new gaps in a system that’s already insanely complex. Simplification and clarity are both needed to avoid the global tax system collapsing under its own weight.

Still, getting to this stage is a victory in itself. No doubt the spirit of the Vesteys will live on, and new creative ways to dodge taxes will be found – but if the current revamp lasts another 100 years, it will be worth it.

(Source: bloomberg.com, dated 7th June, 2021)

8 Apple battery lawsuit: Millions of iPhone users could get payouts in legal action

Millions of iPhone users could be eligible for payouts, following the launch of a legal claim accusing Apple of secretly slowing the performance of older phones.

Justin Gutmann alleges the company misled users over an upgrade that it said would enhance performance but, in fact, slowed phones down. He is seeking damages of around £768m for up to 25 million UK iPhone users. Apple says it has “never” intentionally shortened the life of its products.

The claim, which has been filed with the Competition Appeal Tribunal, alleges Apple slowed down the performance of older iPhones, in a process known as “throttling”, in order to avoid expensive recalls or repairs. It relates to the introduction of a power management tool released in a software update to iPhone users in January 2017, to combat performance issues and stop older devices from abruptly shutting down.

Mr. Gutmann, a consumer champion, says the information about the tool was not included in the software update download description at the time, and that the company failed to make clear that it would slow down devices.

He claims that Apple introduced this tool to hide the fact that iPhone batteries may have struggled to run the latest iOS software, and that rather than recalling products or offering replacement batteries, the firm instead pushed users to download the software updates.

Mr. Gutmann said, “Instead of doing the honourable and legal thing by their customers and offering a free replacement, repair service or compensation, Apple instead misled people by concealing a tool in software updates that slowed their devices by up to 58%.”

The models covered by the claim are the iPhone 6, 6 Plus, 6S, 6S Plus, SE, 7, 7 Plus, 8, 8 Plus and iPhone X models. It is an opt-out claim, which means customers will not need to actively join the case to seek damages.

In a statement, Apple said: “We have never, and would never, do anything to intentionally shorten the life of any Apple product, or degrade the user experience to drive customer upgrades. Our goal has always been to create products that our customers love, and making iPhones last as long as possible is an important part of that.”

The claim by Mr. Gutmann comes two years after a similar case was settled in the United States. In 2020, Apple agreed to pay $113m to settle allegations that it slowed down older iPhones. Thirty-three US states claimed that Apple had done this to drive users into buying new devices. Millions of people were affected when the models of iPhone 6 and 7 and SE were slowed down in 2016 in a scandal that was dubbed batterygate.

At the time, Apple declined to comment, however, it had previously said the phones were slowed to preserve ageing battery life. Claire Holubowskyj, an analyst at the research firm Enders Analysis, said issues like this may continue to crop up, given the technical limitations of ageing batteries. “Technology in newer devices improves in leaps and bounds, not as a steady crawl, creating issues when releasing software updates which have to work on devices with often wildly different capabilities,” Ms. Holubowskyj said.

“Apple generates 84% of its revenue from selling new devices, making them reluctant to hold back updates to ensure older models keep working smoothly.” “Until problems of devices and software updates outlasting and exceeding the capabilities of aging batteries are resolved, this challenge will recur.”

[Source: www.bbc.com dated 17th June, 2022.]

9 Amazon to begin drone deliveries in Lockeford, California this year

Amazon says it will begin delivering parcels to shoppers by drone for the first time later this year, pending final regulatory approval.

Users in the Californian town of Lockeford will be able to sign up to have thousands of goods delivered by air to their homes, it said. The shopping giant has promised drone delivery for years but has faced delays and reported setbacks. But it said it planned to roll out the service more widely after Lockeford. “The promise of drone delivery has often felt like science fiction,” it said in a blog post. “[But] later this year, Amazon customers living in Lockeford, California, will become among the first to receive Prime Air deliveries.”

“Their feedback about Prime Air will help us create a service that will safely scale to meet the needs of customers everywhere.” “Their feedback about Prime Air will help us create a service that will safely scale to meet the needs of customers everywhere.”

Amazon said the drones will be programmed to drop parcels in the backyards of customers in Lockeford, which has a population of about 4,000 people.

They will be able to fly “beyond-line-of-sight”, meaning they don’t have to be controlled by a visual observer and instead use sensors to avoid other aircraft, people, pets and obstacles. The aim is to get packages to customers safely in less than an hour, the retailer said.

In the past, Amazon has been accused of using the promise of drone delivery as a headline-grabber to push its publicity around its Prime membership service. In 2013, former boss and founder Jeff Bezos pledged to fill the skies with a fleet of delivery drones within five years. And in 2019, Amazon said it would be delivering by drone to customers “within months”.

In April, a report by news site Bloomberg alleged safety concerns over its drones – although the retailer said it “rigorously” tested its flights in compliance with “all applicable regulations”

In December 2016, the company ran an apparently successful trial in Cambridge, UK. A package was delivered, by drone, in 13 minutes. Explaining how Prime Air deliveries would work, Amazon said: “Once onboarded, customers in Lockeford will see Prime Air-eligible items on Amazon. They will place an order as they normally would and receive an estimated arrival time with a status tracker for their order.

“For these deliveries, the drone will fly to the designated delivery location, descend to the customer’s backyard, and hover at a safe height. It will then safely release the package and rise back up to altitude.”

[Source: www.bbc.com dated 14th June, 2022]

II. WORLD NEWS

10 How the Ukraine war is triggering a food crisis

Breadbasket of the world

Russia and Ukraine together export nearly a third of the world’s wheat and barley, more than 70% of its sunflower oil and are big suppliers of corn. Now, Russia’s hostilities in Ukraine are preventing grain from leaving the “breadbasket of the world”.

Food more expensive

The Ukraine war is making food more expensive across the globe. And it’s threatening to worsen shortages, hunger and political instability in developing countries.

Parts of Africa, Asia hit

The war is preventing some 20 million tons of Ukrainian grain from getting to the Middle East, North Africa and parts of Asia.

181 million may face crisis

Experts say 400 million people worldwide rely on Ukrainian food supplies. The Food and Agriculture Organization warns that up to 181 million people in 41 countries could face a food crisis or worse levels of hunger this year.

Blockaded ports

Weeks of negotiations on safe corridors to get grain out of Ukraine’s Black Sea ports have made little progress. 90% of wheat and other grain from Ukraine are shipped to world markets by sea.

Transport by rail

Some grain is being rerouted through Europe by rail and road, but that quantity is just a fraction. This mode of transport is also increasing prices.

Western sanctions

Russian grain isn’t getting out, either. Moscow argues that Western sanctions on its banking and shipping industries make it impossible for Russia to export food and fertilizer.

[Source: www.economictimes.com dated 20th June, 2022]

III. ENVIRONMENT

11 Melting ice in Arctic ocean could transform international shipping routes

With climate change making an adverse impact on the environment, especially on oceans across the world, the fate of the Arctic Ocean looks horrid. Climate models have shown that parts of the Arctic that were once canvassed in ice all year are warming so quickly that they will be reliably ice-free for quite a long time in as not many as twenty years. Scientists say that the Arctic’s changing climate will imperil countless species that flourish in freezing temperatures.

According to researchers, another consequence of the melting ice in the Arctic Ocean could affect the regulation of shipping routes over the next few decades.

For the study, a couple of climate scientists at Brown University worked with a legal scholar at the University Of Maine School Of Law. They projected that by 2065, the Arctic’s traversability will increase so enormously that it could yield new shipping routes in worldwide waters — diminishing the shipping industry’s carbon footprints as well as weakening Russia’s control over trade in the Arctic.

This study’s lead author and a professor of Earth, environmental and planetary sciences at Brown, Amanda Lynch, said, “There’s no scenario in which melting ice in the Arctic is good news. But the unfortunate reality is that the ice is already retreating, these routes are opening up, and we need to start thinking critically about the legal, environmental and geopolitical implications.”

Lynch, who has studied climate change in the Arctic for almost 30 years, expressed that as an initial step, she worked with Xueke Li who is a postdoctoral research associate at the Institute at Brown for Environment and Society, to model four navigation route situations based on four likely results of global actions to halt climate change in the coming years. Their projections showed that unless global leaders effectively successfully constrain warming to 1.5 degrees Celsius over the course of the next 43 years, climate change will probably open up a few new routes through international waters by the middle of this century.

According to Charles Norchi, who is the director of the Center for Oceans and Coastal Law at Maine Law and a visiting scholar at Brown’s Watson Institute for International and Public Affairs, these changes could have significant ramifications for world trade and global politics.

Norchi explained that since 1982, the United Nations Convention on the Law of the Sea has given Arctic coastal states enhanced authority over primary shipping routes. Article 234 of the convention clearly states that in the name of “the prevention, reduction and control of marine pollution from vessels,” countries whose coastlines are near-Arctic shipping routes have the ability to regulate the route’s maritime traffic, so long as the area remains ice-covered for the majority of the year.

And for decades Russia has used Article 234 for its own economic and geopolitical interests. One Russian law requires all vessels passing through the Northern Sea Route to be piloted by Russians. The country also requires that passing vessels pay tolls and provide advance notice of their plans to use the route. The heavy regulation is one among many reasons why major shipping companies often bypass the route’s heavy regulations and high costs and instead use the Suez and Panama canals — longer, but cheaper and easier, trade routes.

But as the ice near Russia’s northern coast begins to melt, Norchi said, so will the country’s grip on shipping through the Arctic Ocean.

According to Lynch, previous studies have shown that Arctic routes are 30% to 50% shorter than the Suez Canal and Panama Canal routes, with transit time reduced by an estimated 14 to 20 days. That means that if international Arctic waters warm enough to open up new pathways, shipping companies could reduce their greenhouse gas emissions by about 24% while also saving money and time.

Lynch concluded by saying that it’s better to ask questions about the future of shipping now, rather than later, given how long it can take to establish international laws. She hopes that kicking off the conversation on the Arctic’s trade future with a well-researched scholarship might help world leaders make informed decisions about protecting the Earth’s climate from future harm.

[Source: www.phys.org dated 20th June, 2022]

IV. ETHICS

12 Ernst & Young to Pay $100 Million Fine After Auditors Cheated on Exams

The S.E.C. said the cheating involved hundreds of the firm’s auditors from 2017 to 2021.
 
Ernst & Young, one of the world’s largest auditing firms, has agreed to pay a $100 million fine after U.S. securities regulators found that some of its auditors had cheated on ethics exams — and that the firm had done nothing to stop the practice.

The penalty is the largest ever imposed by the Securities and Exchange Commission against an auditing firm. An administrative civil order filed by regulators said Ernst — also known as EY — had misled investigators, withheld evidence and violated public accounting rules designed to maintain the integrity of the profession.

“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, the commission’s director of enforcement, in announcing the settlement on Tuesday.

The penalty is twice the sum that KPMG, another big audit firm, paid in 2019 to resolve an investigation into similar allegations of cheating by auditors on internal training exams.

Ernst, which admitted in the order that its conduct was wrong, said in a statement that “nothing is more important than our integrity and our ethics.” The firm also said that “sharing answers on any assessment or exam is a violation of our Code of Conduct and is not tolerated” and said it would take efforts to enforce compliance with ethical rules.

The ethics exams that Ernst auditors cheated on were part of a continuing education program offered by most states for accountants to keep their professional licenses, according to the commission. The S.E.C. said the cheating involved hundreds of the firm’s auditors from 2017 to 2021.

Forty-nine auditors at Ernst received the “answer key” to an ethics exam that is part of the initial process of becoming a certified public accountant, according to the S.E.C.’s administrative order.

Regulators said this was not the first time that there had been widespread cheating on ethics exams by Ernst employees. The S.E.C. said a somewhat similar cheating scandal, which the firm handled internally, took place from 2012 to 2015.

As part of the settlement, the S.E.C. has required Ernst to hire two independent consultants. One will review the firm’s policies on ethics procedures, and the other will review its failure to properly disclose the cheating.

Mr. Grewal said the settlement “should serve as a clear message that the S.E.C. will not tolerate integrity failures by independent auditors.”

(Source: NYT, By Matthew Goldstein, dated 28th June, 2022)