In a rare protest against the government, Ernst & Young is calling the Securities and Exchange Commission in USA “irresponsible” for cracking down on the accounting firm's questionable practices.
The SEC is trying to bar E&Y from taking on new clients for six months as punishment for helping peddle and endorse software products made by one of its consulting clients to E&Y's other audit clients.
Keeping those two worlds separate has been at the center of the recent accounting reforms enacted following broad cooked-book scandals at Enron, WorldCom, HealthSouth, AOL Time Warner and others.
The SEC charged that from 1991 to 1999, E&Y sales people worked with auditors to help client PeopleSoft Inc. get its software purchased by E&Y's other audit clients — and earned $452 million in fees for doing so.
E&Y sold off its sales-consulting subsidiary in the wake of the scandals, but has said in recent SEC hearings that it would continue to help clients in similar fashion in the future.
The SEC said E&Y was hit with an injunction in 1995 to stop the improper business relationships, but ignored it and continued. The SEC also wants E&Y to give back fees it got from its audit clients, totaling $1.7 million plus interest.
“The SEC staff has no reason to seek any sanctions against Ernst & Young in the PeopleSoft matter,” the firm said.
