Thursday, October 07, 2004

Ernst & Young Review Raises New Independence Questions

Accounting experts say the issues Ernst has identified appear minor compared with some of the consulting and other services that auditors routinely performed for clients prior to the 2002 Sarbanes-Oxley Act. And the latest issues aren't on the same scale as Ernst's PeopleSoft agreements, through which the firm received nearly $500 million from 1994 to 1999.

Ernst & Young LLP, which earlier this year was punished for violating auditor independence rules, is telling regulators and some of its clients that it has identified issues that may compromise the accounting firm's independence, according to company disclosures.

In reporting the latest independence issues, some accounting experts say, Ernst apparently is erring on the side of caution because of its previous run-ins with regulators, as well as the fact that the entire accounting industry has come under fire for failures to stop corporate scandals. In a number of cases, Ernst highlighted issues that regulators or the companies themselves determined didn't compromise the auditor's independence.

Ernst & Young Review Raises New Independence Questions

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