Big Four firm Ernst & Young will pay some $125 million to settle ongoing claims stemming from the firm's audit of failed thrift, Superior Bank FSB of Illinois. By virtue of a signed consent order with the Office of Thrift Supervision, E&Y will pay the Federal Deposit Insurance Corp. $85 million as receiver for Hinsdale, Ill.-based Superior, and an additional $40 million in restitution. In the settlement, Ernst & Young didn't admit or deny that its audits failed to comply with any professional accounting standards. The FDIC filed suit against Ernst & Young shortly after Superior Bank was declared insolvent three years ago. The FDIC contended that the audit firm had delayed alerting regulators about improper accounting practices at the banking concern because it was wary that the negative publicity would hinder E&Y's efforts to sell its consulting arm. The suit was dismissed in 2003, but the FDIC subsequently appealed. Ernst & Young said it has since implemented changes to its audit methodology for savings and loan association clients.
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
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access