E&Y faces audit probe

Ernst & Young is set to be grilled by the accountants’ Joint Disciplinary Scheme over its role as former auditor of troubled life insurer Equitable Life.

The move was confirmed shortly after Equitable’s annual general meeting last week which gave policyholders the first chance to publicly quiz the insurers’ new directors.

The ICAEW had been considering the role played by E&Y and other members since Equitable closed its doors to new business late last year and has now referred the case to the JDS.

Chris Dickson, executive counsel of the JDS, confirmed the JDS would be investigating the auditors. He also confirmed two other institute members, Peter Davis and Julian Hirst, had also been referred for investigation.

Former National Lottery regulator Davis was a non-executive director at the insurer, while Hirst was formerly Equitable’s chief accountant.

Dickson said the JDS would review the necessary documents and then begin the task of interviewing individuals involved in the case.

Chris Headdon, the former FD at Equitable, will not be investigated by the JDS as he is not a member either the ICAEW or ICAS.

PricewaterhouseCoopers took over the audit of Equitable after E&Y had stood down in March this year. At the same time Equitable instructed City law firm Herbert Smith to investigate the circumstances surrounding the collapse of the insurer.

A spokesman for E&Y said: ‘We will co-operate fully with the JDS inquiry.

We maintain that the audited accounts relating to Equitable Life were properly drawn up based on the circumstances that were relevant at the time.’

The JDS is not the only organisation taking an active interest in the Equitable affair.

The Financial Services Authority is currently reviewing the circumstances surrounding the insurer’s collapse, and the House of Commons Treasury Select Committee has blasted those involved with the collapse, including the former auditors at E&Y

Equitable audit slammed: www.accountancy

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