ERNST & YOUNG IRELAND is to be hauled before a disciplinary panel over its audit of troubled Anglo Irish Bank.
The firm faces accusations of sub-standard work on three counts, the Financial Times states, following a report by former Irish comptroller and auditor-general John Purcell.
E&Y might have tripped up on large loans made by Anglo Irish to its former chairman, Sean Fitzpatrick, and has also come under fire for a loan given to former bank director William McAteer.
Purcell also raised concerns over the way E&Y handled transactions between Anglo Irish and rival bank Irish Life & Permanent during the 2008 crisis.
E&Y Ireland yesterday said it "fundamentally disagrees" with the call for a disciplinary hearing, adding: "This is a preliminary stage of the process and, for the avoidance of doubt, there has been no adverse finding made against Ernst & Young in respect of the audit of Anglo Irish Bank."
The Chartered Accountants Regulatory Board will now set a date for the disciplinary hearing. E&Y is already embroiled in a legal tussle over its audit of doomed Lehman Brothers, and this accusation could be another blow to its reputation.
The EY partners in the Republic of Ireland do not, indeed cannot, enjoy limitation of liability so this cloud will hang over them all until the matter is resolved. The case could last years and until it is resolved EY will suffer when tendering for new work and when competing for new talent in the jobs market at trainee and qualified levels.
The partners cannot even jump ship to other firms as the liability simply follows them.
There needs to be swift resolution to avoid inertia in this firm.
Posted by: Russell Mitchell, 15 Sep 2011 | 10:36
Is there any information of how much EY charged for their audit work on Anglo and any non audit related fees?
Posted by: David Zieloni, 19 Sep 2011 | 14:40
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