Ernst & Young has agreed to pay more than $4 million to settle Securities and Exchange Commission charges that it violated auditor independence rules requiring firms to maintain objectivity and impartiality with clients.
According to the SEC, Washington Council EY (WCEY), an Ernst & Young subsidiary, lobbied congressional staffers on behalf of two audit clients, which is not permitted under the commission’s auditor independence rules because the firm is effectively acting as an advocate for those clients. Despite the disallowed legislative advisory services, Ernst & Young indicated in audit reports issued on the clients’ financial statements that it was independent.
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