In its biggest enforcement action to date, the Public Company Accounting Oversight Board has fined Ernst & Young $2 million, sanctioned four current and former partners, and fined three of the partners a total of $100,000 to settle allegations that the firm violated auditing standards and rules.
During a 2008 audit inspection, the PCAOB discovered some shaky accounting and auditing for product returns at Medicis Pharmaceutical Corp., not to mention evidence that E&Y questioned itself internally before allowing faulty assumptions to pass unchallenged. Medicis filed a restatement in 2008 to correct more than five years worth of accounting for product returns as a result of the inspection finding. The PCAOB launched a full investigation and enforcement proceeding in March 2011, with E&Y and its auditors settling the matter without admitting or denying the board’s findings.
