E&Y TO PAY PCAOB $2M TO SETTLE AUDIT CHARGES

New York - The Public Company Accounting Oversight Board has imposed a $2 million civil penalty against Ernst & Young, the largest civil money penalty to date in the PCAOB's 10-year history, and censured the firm for audit failures, while sanctioning four of E&Y's current and former partners.

The settled disciplinary order relates to three of the firm's audits of Medicis Pharmaceutical Corp., and a consultation stemming from an internal E&Y audit quality review of one of the audits. The firm and the sanctioned partners agreed to settle without admitting or denying the PCAOB's findings.

E&Y said that it has made changes to address the PCAOB's concerns. "Ernst & Young cooperated fully with the PCAOB in its investigation of this matter," said Ernst & Young spokesman Charles Perkins in a statement. "This settlement allows us to put this matter behind us. We have implemented changes to our policies and procedures that directly address the PCAOB's concerns and will enhance quality in the future. We take these issues very seriously, and remain highly confident in the quality of our audits."

In the audits of Medicis' Dec. 31, 2005, 2006 and 2007, financial statements, the PCAOB found that E&Y and its partners failed to properly evaluate a material component of the company's financial statements - its sales returns reserve.

 

FASB, IASB WORK ON DIFFERENCES IN MODELS

Norwalk, Conn. - The Financial Accounting Standards Board and the International Accounting Standards Board said that they would work together on seeking to reduce the differences in their classification and measurement models for financial instruments. The discussions will be part of FASB's ongoing redeliberation of a proposed Accounting Standards Update on financial instruments that was originally issued in May 2010.

The financial instruments standard has been one of their priority projects, along with revenue recognition, leasing and insurance contracts.

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