E&Y investigated over Lehman Brothers
The AADB investigates Ernst & Young's role in reporting Lehman Brothers' compliance with the FSA client asset rules.
Accountancy’s watchdog is investigating Ernst & Young over its audit reporting of client assets held by Lehman Brothers’ international arm.
The Accountancy and Actuarial Discipline Board (AADB) has begun an investigation of E&Y in its role in reporting to the FSA on audit client Lehman Brothers International Europe’s compliance with the authority’s client asset rules, which govern the protection of client money.
An E&Y spokeswoman said it was one of a number of auditors that had been referred to the AADB by the FSA “in relation to reporting on client assets”.
“Ernst & Young can confirm that it has been approached by the AADB in relation to this matter. We will cooperate fully with the investigation.”
This decision was taken following consultation with the ICAEW.
It also announced today an investigation of PwC’s reporting disclosures on client assets, as auditors of JPMorgan. The AADB is the investigative arm of the Financial Reporting Council.
A PwC spokeswoman said: “We are fully cooperating with the AADB investigation and have no further comment to make at this stage.”
Last week the FSA criticised auditors’ work in reporting on investment banks’ client assets.
Further reading:
Watchdog investigates PwC over JPMorgan
Auditors slammed by FSA for ‘client asset’ failings
