Accountancy’s regulator upheld E&Y’s appeal against the earlier tribunal
decision that the firm and audit partner Kevin McNamara lacked objectivity and
independence as auditor of Equitable Life.
The Appeal Tribunal overturned the Joint Disciplinary Tribunal findings that
E&Y and McNamara had lacked objectivity and independence.
There was no evidence of an “improper element” in the relationship between
the firm/McNamara and Equitable.
The appeal said that a lack of professional competence by E&Y and
McNamara failed to justify an inference of lack of objectivity.
“In our judgment, mere lack of professional competence … does not even begin
to justify an inference that in relation to those areas E&Y and Mr McNamara
were guilty of the serious charge of lacking objectivity and independence,” the
appeal report stated.
The firm did not contest the JDT’s findings that it should have warned
policyholders in Equitable’s financial statement sof the consequences of losing
the Hyman case (which pushed Equitable to the brink of collapse), and that the
statements did not show a true and fair view because of that inadequate
Fines and costs against the firm were reduced to nearly £3m, from £10m under
the original findings.
“We welcome the fact that the Appeal Tribunal has significantly reduced our
fine by over 90% to £500,000 and has recognised the appropriateness of our
appeal by not awarding costs against us,” said an E&Y statement.
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