Big Four

The PCAOB has imposed a $2 million civil money penalty against Ernst & Young and sanctioned four of its current and former partners for violating board rules and standards, according to a Feb. 8 statement.

The Commodity Futures Trading Commission (CFTC) has subpoenaed PricewaterhouseCoopers, the auditors for troubled financial firm MF Global, for information on the segregation of clients' assets from the firm’s, in light of the roughly $633 million allegedly missing from customer accounts when the company filed the eighth largest bankruptcy in U.S. history on Oct.

Saying that the current market for large company audits lacks sufficient competition, Britain's Office of Fair Trading has launched an investigation of the Big Four audit companies, which last year collectively earned 99 percent of the audit fees paid by FTSE-100 companies, according to the Associated Press.

Wachovia Corp. auditor KPMG will shell out $37 million to help settle a federal class action lawsuit brought by investors in New York, reported Reuters. The suit alleges that Well Fargo Co. subsidiary Wachovia was intentionally less than transparent about the viability of certain home loans it sold before the financial crisis, said Reuters.

A $350 million class action lawsuit filed against KPMG LLP alleges that the Big Four firm repeatedly fails to promote its female employees and discriminates against them in terms of salary and maternity leave, reported Reuters.

The Public Company Accounting Oversight Board (PCAOB) entered into its first cooperative agreement with Swiss accounting and auditing regulators, reported Reuters.

According to Reuters, Ernst & Young (E&Y) has filed to have the civil fraud suit brought by the NYS attorney general’s office in December moved from state court to a federal venue.

According to the Wall Street Journal, New York prosecutors are posed to file civil charges against the Big Four auditor for its alleged role in the collapse of Lehman Brothers, marking the first time a major accounting firm is being targeted for its role in the financial crisis.

The Accountancy and Actuarial Disciplinary Board (AADB), Britain’s governing body over accounting, has launched an inquiry over allegations that Ernst & Young approved tactics that allowed Lehman Brothers to hide $50 billion of debt of its books.

The lengthy relationship between embattled H&R Block and McGladrey & Pullen, the fifth largest accounting firm in the New York area, has soured. The latter has issued formal notice of intent to terminate its contract with H&R Block. While McGladrey & Pullen’s audit practice is an independent, partner-owned firm, related professional services have been offered through RSM McGladrey under an agreement with H&R Block.

Four current and former partners of the Big Four firm Ernst & Young were found guilty yesterday of fraud involving tax shelters that helped wealthy people evade income taxes.

Convicted were:

Big Four firm KPMG is being sued over its audits of New Century Financial Corp. by the trustee overseeing the bankruptcy of the subprime lender, in one of the first examples of an auditor being blamed for the subprime mortgage crisis.

This follows last April's independent report solicited by the United States Department of Justice that said KPMG may be liable for allowing New Century to engage “in a number of significant improper and imprudent practices related to its loan originations, operations and financial reporting."

As prosecutors begin to unravel the details of how money manager Bernard Madoff was able to allegedly scam investors out of approximately $50 billion, large accounting firms are likely to be among the defendants, the New York Times reported Monday.