Ernst & Young settles SEC accusations for $4 million 

Ernst & Young agreed to pay $4 million to settle charges that it compromised its independence.

Ernst & Young has agreed to pay $4 million to settle charges by the Securities and Exchange Commission that its auditors illegally lobbied Congressional staff on behalf of clients.

The SEC found that Washington Council EY, an Ernst & Young subsidiary, lobbied for clients of the company’s auditing arm despite the Ernst & Young’s assurances in published financial statements that it was “independent.” The violations are said to have occurred in 2009, although the SEC didn’t name the companies involved or the specific legislation.

“Auditor independence is critical to the integrity of the financial reporting process,” Scott W. Friestad, associate director in the SEC’s Division of Enforcement, said in a statement. “When an auditor acts as an advocate for its audit client, that independence is compromised.”

“We regret these instances that arose many years ago and are pleased to put this matter behind us,” Ernst & Young said in a statement to the Associated Press.

In 2012, the firm said it voluntarily stopped lobbying for clients, which the SEC factored into deciding on the latest sanctions.

In the past few years, the SEC has brought cases against a number of accounting firms, including Arthur Anderson following the Enron scandal in 2002. The SEC also took action against Ernst & Young in 2007 when it ordered it to pay $1.6 million to settle charges related to its work with audit client PNC Financial Services Group.

 

Source: fortune

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