It’s not a lot of money but, oh, the stupidity of it. I have actually been rather impressed with EY lately, both for their ability to stay out of trouble, to take on the staff shed by other firms, and for their bold moves on the business model front.
The Commission rejected E&Y’s claim that its relationship came within an exception to the rule, finding that, in fact, the firm’s independence had been compromised and that Mr. Thompson was a cause. According to the Ernst & Young Order, “[b]usiness relationships with persons associated with the audit client in a decision-making capacity, such as audit client directors, officers and substantial stockholders” are prohibited by the independence rules.
Here, Mr. Thompson was a member of the boards of three E&Y audit clients and on the audit committee of one. Mr. Thompson was well aware that E&Y was the auditor of the three firms since he signed filings for each and, as a member of Company A’s audit committee, participated in the retention of the audit firm…
Ernst & Young LLP, one of the so-called Big Four accounting firms, agreed to forfeit more than US$2.9-million to settle U.S. regulatory claims it compromised its independence while auditing three companies.
The firm “engaged in improper professional conduct” after agreeing in 2002 to create an audio series of recorded interviews with industry leaders in collaboration with Mark Thompson, a board member for three of its clients, the Securities and Exchange Commission said in a statement on Wednesday. It didn’t identify the companies.
Best Buy Co., the largest U.S. electronics dealer, announced plans in 2004 to drop Ernst & Young as its auditor after learning Thompson, a member of its audit committee, had a separate relationship with the accounting firm. Thompson earned about half his income by coaching Ernst & Young partners to conduct talk show-style interviews for its “Thought Leaders Series” of compact discs, the SEC said.