PQ magazine is for part qualified accountants.
Read the latest web issue here – if you like what you see sign up today
Don’t get too close
EY has agreed to pay a whopping $9.3m to the US 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.
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 has left 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. In this case, EY agreed to a $4.366m sanction and Hartford and Brehl agreed to pay penalties of $25,000 each. Hartford no longer works for EY.
[«all Career Advice]
Subscribe to RSS