Bailey McCann, Opalesque New York:
The Securities and Exchange Commission (SEC) has charged Ernst & Young with violations of independent auditor rules for lobbying activities at the firm. Ernst & Young has agreed to pay more than $4 million to settle those charges, according to a statement.
The SEC’s order instituting a settled administrative proceeding finds that an Ernst & Young subsidiary lobbied congressional staff on behalf of two audit clients. Such lobbying activities were impermissible under the SEC’s auditor independence rules because they put the firm in the position of being an advocate for those audit clients. Despite providing the prohibited legislative advisory services on behalf of the clients, Ernst & Young repeatedly represented that it was "independent" in audit reports issued on the clients’ financial statements.
Ernst & Young lobbied through a subsidiary -- Washington Council EY (WCEY). That subsidiary violated auditor independence rules by sending letters signed by a senior executive of an Ernst & Young audit client to congressional staff, urging passage of certain legislation. WCEY also asked congressional staff to insert language into a bill that was favorable to the business interests of an Ernst & Young audit client. The organization further met with congressional staff in order to defeat legislation detrimental to the business interests of an Ernst & Young au......................
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