April 28th in Accountancy News, Big4, E&Y, Lehman by jason2009 .
Investor Litigation hits E&Y
Ernst & Young has been named as a defendant in an amended class action in the Lehman case…
The claims reflect findings from the report filed last month by Lehman bankruptcy examiner Anton Valukas.
Reuters: Ernst & Young LLP, the auditor for Lehman Brothers Holdings Inc (LEHMQ.PK), was added as a defendant to an investor lawsuit seeking to recover money from former Lehman executives and underwriters, Bloomberg News said, citing a court document filed on Friday.
E&Y denied that Lehman’s demise was caused by any accounting issues suggesting it was caused by a collapse in its liquidity, which in turn was caused by declining asset values and loss of market confidence in Lehman. Straightforward really.
May 3, 2010
Hey all,
I work in the industry and think it’s important to note that the auditors operated under existing rules and GAAP (Generally Accepted Accounting Principles).
According to Compliance Week, “companies were still following Financial Accounting Standard No. 140, Accounting for Transfers and Servicing of Financial Assets, to decide when an asset transfer qualified as a sale (that could be kept off the balance sheet) or when it had to be treated as a financing (that remained on)….That rule has since been codified into the Accounting Standards Codification under ASC 860-10.”