The Price of Dishonesty in the Auditing Profession

By David Short | Director and Amanda Kubheka | Candidate Attorney 

The integrity of financial reporting depends heavily on the trustworthiness of the professionals who perform audits. When that trust is compromised from within, the consequences can be serious, not only for the employer, but also for the credibility of the profession.

This issue was considered by the Labour Court in Koekemoer v PricewaterhouseCoopers t/a PWC (Worcester) and Others (2026) 47 ILJ 345 (LC). The judgment, delivered by Acting Judge Kahanovitz, confirms that in professions where honesty and ethical conduct are essential, a deliberate act of dishonesty can irreparably damage the employment relationship and justify dismissal.

Factual Background

The applicant was employed as a trainee accountant on a fixed-term learnership contract at PricewaterhouseCoopers (PWC). During July and August 2022, she was tasked with conducting audits for two clients.

As part of these audits, she was required to perform an internal control known as the “EFT test”. This was a multi-step protocol introduced by the firm to detect and prevent fraudulent payments. One of the required steps was that the associate had to telephone beneficiaries to verify their banking details before funds were transferred.

The trainee failed to make the required calls. Despite this, she recorded in her audit working papers that the verification step had been completed.

A subsequent internal investigation revealed that she had not only failed to perform the control, but had also created a false paper trail. She inserted the name of a fictitious accountant and claimed to have spoken to that person to verify the banking details. The person named was, in fact, a personal Facebook friend.

When confronted with the evidence, the employee pleaded guilty to gross dishonesty. She expressed remorse and admitted that her audit submissions were false.

Despite her guilty plea and clean disciplinary record, PWC terminated her employment. The dismissal was upheld by a CCMA commissioner. The employee then took the matter on review to the Labour Court.

The Dispute

Because the employee had pleaded guilty to gross dishonesty at her disciplinary enquiry, the finding of misconduct itself was not the central issue on review. The question before the Labour Court was whether dismissal was a fair and appropriate sanction in the circumstances.

The employee argued that PWC’s conduct after discovering the dishonesty showed that the trust relationship had not been destroyed. She pointed out that the firm did not immediately suspend her. Instead, PWC allowed her to continue working for approximately two and a half months so that she could help finalise a large and important audit for the Kannaland Municipality.

According to the employee, if PWC had trusted her to continue working on a significant audit, it could not later argue that the employment relationship had broken down beyond repair. She also said that being allowed to continue working led her to believe that she was being given a second chance.

The Employer’s Response

PWC argued that the auditing profession requires an exceptionally high standard of honesty and ethical conduct. On this basis, any established dishonesty by an audit professional seriously damages the trust on which the employment relationship depends.

The firm also provided an operational explanation for not suspending the employee immediately. The Kannaland Municipality audit was time-sensitive and already well advanced. Removing the trainee at that stage would have created serious operational difficulties and may have affected the firm’s ability to sign off on the audit within the required timeframe.

PWC also took steps to manage the risk of allowing her to continue working temporarily. Her audit supervisors were informed of the misconduct, the investigation was kept confidential, and heightened supervision measures were put in place over her work.

The Court’s Findings

The Labour Court confirmed that an employer is not legally required to suspend an employee pending a disciplinary hearing. The fact that an employee is allowed to continue working for a period after misconduct has been discovered does not automatically mean that the employer has waived its right to argue that the trust relationship has broken down.

The court accepted that PWC had made a business decision to manage its operational risk while preparing to finalise the disciplinary process. This did not mean that the firm still trusted the employee in the ordinary sense, nor did it prevent the firm from relying on the seriousness of the misconduct.

The court also emphasised the particular importance of honesty in the auditing profession. An auditing firm cannot credibly assure clients that books of account have been properly audited if it cannot trust its own staff to perform audit procedures honestly and accurately.

The Labour Court therefore found that dismissal was a fair sanction.

Practical Implications

The judgment reinforces several important principles for employers, particularly those operating in professional, fiduciary or highly regulated environments.

First, dishonesty in a professional setting may justify dismissal, even where the employee has a clean disciplinary record and expresses remorse.

Secondly, an employer is not obliged to suspend an employee immediately after discovering misconduct. A failure to suspend does not, on its own, prove that the trust relationship remains intact.

Thirdly, where an employer allows an employee accused of dishonesty to continue working temporarily, it should take practical steps to manage the risk. These may include closer supervision, limiting the employee’s authority, informing appropriate managers on a confidential basis, and ensuring that the decision is properly documented.

This is particularly important in environments where employees are expected to handle sensitive information, client funds, financial controls, audit processes, compliance obligations or other matters requiring a high degree of trust.

Conclusion

The Labour Court confirmed that PWC was entitled to enforce a strict standard of integrity in the circumstances.

The judgment serves as a reminder that dishonesty does not have to involve financial gain or large-scale fraud to justify dismissal. In a profession built on trust, a false record, a false verification, or a false assurance may be enough to destroy the employment relationship.

For employers, the case also confirms that operational decisions made during an investigation will not necessarily prevent dismissal, provided the employer can show that it managed the risk and acted consistently with the seriousness of the misconduct.