Ernst And Young Under Fire Over Lehman Brothers Audit

Thu, 18 Mar 2010

Big Four accountancy firm Ernst and Young has been heavily criticised for its role in the 2008 collapse of US bank Lehman Brothers.

US lawyer Anton Valukas, who was appointed by the US bankruptcy court to examine Lehman's collapse, published a 2,200-page accounting practices report last week which claimed that E&Y is partly to blame for the fall of the investment banking giant.

The report questioned the role E&Y played in concealing the extent of the bank's financial problems, and concluded that its audit of Lehman Brothers did not meet professional standards.

According to Mr Valukas, the accountancy giant used a number of quarter-end balance sheet window-dressing operations – know as Repo 105 transactions - to generate cash and boost the presentation of the bank’s balance sheet prior to the publication of its accounts.

He claimed that E&Y helped the bank hide $50bn (£33bn) of loans off from its balance sheet.

Ernst and Young is now set to face an investigation by the Financial Reporting Council - Britain’s accounting watchdog – to examine whether the transactions carried out by Lehman Brothers were "accounted for and audited in the UK to determine any implications".
add to favouritesnewsletterlink to this pagesend to friendpost comments

Link to this page

Copy and Paste the following HTML into your page.