PracticeAccounting FirmsErnst & Young drawn into fraud investigation

Ernst & Young drawn into fraud investigation

Big Four firm Ernst & Young has been drawn into a US Congressional committee investigation into the financial activities of rehabilitation hospital group HealthSouth.

Link: Sarbanes-Oxley steps in against health care group

The House of Energy and Commerce committee yesterday sent out letters to E&Y, as well as to HealthSouth’s acting chairman Joel Gordon, requesting a number of records and other possible evidence relating to the company’s finances.

The Securities and Exchange Commission has accused HealthSouth and its former chief executive Richard Scrushy of improperly inflating earnings by about $2.5bn (£1.6bn) since 1997. It also said the scheme may have been in practice since 1986.

Ten HealthSouth executives have already said they will plead guilty to securities fraud in relation to the company’s accounts.

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