Ernst & Young
Big Four accounting and auditing firm
- Entries
- 8
- On the record
- 3
- Stories
- 1
- Latest entry
- Dec 8, 2022
The record
Ernst & Young, which trades as EY, is one of the Big Four accounting firms, and much of its public record outside the Wirecard collapse sits with the U.S. Securities and Exchange Commission. In 2004 an SEC administrative law judge found the firm had partnered with its audit client PeopleSoft to the maximum extent possible, and suspended it from taking new SEC-registered audit clients for six months, with $1,686,500 in disgorgement.
Later SEC orders turned on independence and integrity. In 2016 the firm paid $9.3 million, without admitting or denying the findings, over two partners' close personal relationships with executives at audit clients. In June 2022 it agreed to a $100 million penalty, the largest the SEC had imposed on an audit firm, and admitted that audit professionals cheated on CPA ethics exams and that it gave the agency a misleading answer during the investigation.
Its audits of failed companies have also drawn claims. The 2010 examiner's report on Lehman Brothers said the bank's accountants at Ernst & Young knew of its Repo 105 transactions; the firm said Lehman's statements were fairly presented under accounting rules. In Hong Kong, the South China Morning Post reported in January 2010 that EY had paid US$200 million to creditors of Akai Holdings the previous September and had settled a separate negligence claim over Moulin Global Eyecare.
Roles and honours on the record
Every entry, newest first
- Reported
Reuters reported that EY has said it acted professionally; Olaf Scholz had criticised it for failing to detect the fraud. Wirecard admits โฌ1.9B likely didn't exist; Braun denies fraud
Stories in this file
The record, entry by entry
- 2002-11-13 Filed The SEC instituted proceedings questioning whether Ernst & Young was independent when it audited PeopleSoft for fiscal 1994 through 1999 while selling and implementing PeopleSoft software through its consulting arm. SEC, Initial Decision Release No. 249
- 2004-04-16 Ruled Chief Administrative Law Judge Brenda P. Murray suspended the firm from accepting new SEC-registrant audit clients for six months, ordered disgorgement of $1,686,500 plus interest, and required an independent consultant. SEC, Initial Decision Release No. 249
- 2009-09 Reported EY paid US$200 million to creditors of its collapsed former client Akai Holdings, the South China Morning Post reported. South China Morning Post report
- 2010-01 Reported EY Hong Kong quietly settled a negligence claim valued at HK$250 million to HK$300 million that the liquidators of Moulin Global Eyecare had threatened to bring; terms were not disclosed. South China Morning Post report
- 2010-03-12 Reported The Lehman Brothers examiner's report said Lehman executives and its Ernst & Young accountants knew of the Repo 105 transactions. An EY spokesman said the financial statements were fairly presented under GAAP. CBS News report
- 2016-09-19 Official The SEC ordered EY to pay $9.3 million in what it called its first cases over independence failures caused by close personal relationships between auditors and client staff. The firm neither admitted nor denied the findings. SEC press release 2016-187
- 2022-06-28 Admitted EY agreed to a $100 million penalty and admitted that audit professionals cheated on CPA ethics exams and continuing education courses, and that it told the SEC it had no current cheating problem after being warned of one. SEC press release 2022-114