PQ magazine is for part qualified accountants.
Read the latest web issue here – if you like what you see sign up today
Keep your distance!
03 November 2016
EY has agreed to pay a whopping $9.3m to the Securities and Exchange Commission to settle charges that two of its audit partners “got too close to their clients on a personal level and violated rules that ensure firms maintain their objectivity and impartiality during audits”.
SEC investigations discovered that one senior partner, Gregory S. Bednar, on an engagement team for the audit of a New York-based public company maintained an improperly close friendship with its chief financial officer. Bednar and the company’s CFO stayed overnight at each other’s homes on multiple occasions and travelled together with family members on overnight trips with no valid business purpose, exchanging hundreds of personal texts, emails and voicemails during the auditing periods. He also became friends with the CFO’s son often treating him to sporting events and other gifts.
Certain EY partners became aware of Bednar’s excessive entertainment spending but took no action to confirm he was complying with his independence obligations.
Both Bednar and EY have consented to the SEC order without admitting or denying the findings. The firm agreed a sanction of $4.975m and Bednar, who no longer works at EY, must pay $45,000
Meanwhile a different partner, Pamela Hartford, caused auditor independence rule violations at EY from March 2012 to June 2014, when she maintained a romantic relationship with financial executive Robert Brehl while she served on the engagement team auditing his company.
Subscribe to RSS