Kevin Reed, Accountancy Age, Monday 4 October 2010 at 13:03:00

The AADB investigates Ernst & Young's role in reporting Lehman Brothers'compliance with the FSA client asset rules.


Accountancy's watchdog is investigatingErnst & Youngover its audit reporting of client assets held by Lehman Brothers' internationalarm.

The Accountancy and Actuarial Discipline Board(AADB)has begun an investigation of E&Y in its role in reporting to the FSA onaudit client Lehman Brothers International Europe's compliance with theauthority's client asset rules, which govern the protection of client money.

An E&Y spokeswoman said it was one of a number of auditors that had beenreferred to the AADB by the FSA "in relation to reporting on client assets".

"Ernst & Young can confirm that it has been approached by the AADB inrelation to this matter. We will cooperate fully with the investigation."

This decision was taken following consultation with the ICAEW.

It also announced today an investigation of PwC's reporting disclosures onclient assets, as auditors of JPMorgan. The AADB is the investigative arm of theFinancial Reporting Council.

A PwC spokeswoman said: "We are fully cooperating with the AADB investigationand have no further comment to make at this stage."

Last week the FSA criticised auditors' work in reporting on investment banks'client assets.

Further reading:

Watchdoginvestigates PwC over JPMorgan

Auditors slammed byFSA for 'client asset' failings