Ernst & Young audit failings have faint echoes of Enron debacle
Auditors Ernst & Young in 2002 decided to identify the firm's riskiest clients and force them to abide by proper accounting rules. It didn't work, so it conducted business as usual. Now, it has agreed to pay an $8.5 million penalty to the US Securities and Exchange Commission over its audit of health club operator, Bally Total Fitness. In failing to adopt its own standards, Ernst & Young has also agreed to a cease and desist order for violating securities laws. Six current and former partners at the firm were sanctioned by the SEC over the failed audit, and for violating shareholder rights. The name Enron must have been on the tips of everybody's tongues. That case was enough to put Arthur Andersen out of business. Read more: AP, The New York Times
