The sanctions imposed on Ernst and Young in the PeopleSoft decision seems harsh to some. There is a six-month suspension of acquiring new audit clients, a $1.7 million fine, a continuing review of E&Y independence policies and procedures, and a cease-and-desist order. However, I got the distinct impression that the SEC administrative judge, although appalled by Ernst and Young's  failures and noting that hundreds of millions of dollars in revenue was earned by E&Y because of the E&Y/PeopleSoft business relationship, pulled back a bit.

This "hesitancy" was also seen elsewhere in a series of recent GAO reports that openly discussed the concern that we can't afford the demise of another national auditing firm like Andersen. Underlying all this appears to be a hope that the Public Company Accounting Oversight Board's actions will ensure independence is properly maintained at accounting firms, especially national ones that audit the overwhelming majority of public companies.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access