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April 17, 2004
Ernst & Young gets hammered
As these earlier posts report, big four accounting firm KPMG has been keeping its defense lawyers quite busy. Now it appears that fellow big four firm Ernst & Young is getting into the act.
Floyd Norris of the NY Times reports today on an unusual court order that the chief SEC administrative judge issued yesterday that fined E&Y a cool $1.7 million and precludes the firm from taking on new audit clients in the U.S. for six months as a penalty for the firm's improper conduct in auditing PeopleSoft, Inc. at a time in which the firm maintained a highly profitable consulting arrangement with the company.
The six-month suspension ties the longest suspension on signing new business ever imposed on one of the leading accounting firms. In 1975, Peat Marwick, a predecessor of KPMG, accepted a similar six-month suspension as part of a settlement of charges that it failed to audit several companies properly, including Penn Central, the railroad that went bankrupt back in the early 1970's.
Posted by Tom at April 17, 2004 11:41 AM
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