Watchdog Fines Ernst & Young Record $2 Million for Audit Errors
February 08, 2012, 4:30 PM ESTBy Jesse Hamilton
Feb. 8 (Bloomberg) -- Ernst & Young LLP agreed to pay a record $2 million civil penalty for failing to fully evaluate three annual audits of Medicis Pharmaceutical Corp.’s financial statements, according to the U.S. auditing regulator.
The Public Company Accounting Oversight Board censured Ernst & Young, one of the so-called Big Four largest auditors, and is collecting its largest fine ever, it said in a statement today. The PCAOB, a non-profit corporation that regulates auditing of U.S.-listed companies, also sanctioned four of Ernst & Young’s current and former partners for breaking rules.
“These audit partners and Ernst & Young -- the company’s outside auditor for more than 20 years -- failed to fulfill their bedrock responsibility,” said James R. Doty, the PCAOB’s chairman, in a statement.
The PCAOB accused Ernst & Young, which neither admitted nor denied wrongdoing in the settlement, of failing to properly evaluate Scottsdale, Arizona-based Medicis’ sales returns reserves. The investigation began 11 months ago and, based on PCAOB rules, had to be kept confidential until today’s settlement.
“We have implemented changes to our policies and procedures that directly address the PCAOB’s concerns and will enhance quality in the future,” Charles Perkins, an Ernst & Young spokesman, said in a statement. “We take these issues very seriously, and remain highly confident in the quality of our audits.”
--Editor: Maura Reynolds
To contact the reporter on this story: Jesse Hamilton in Washington at jhamilton33@bloomberg.net.
To contact the editor responsible for this story: Maura Reynolds at mreynolds34@bloomberg.net.
