Ernst & Young (E&Y) chairman and CEO
James Turley has defended his firm’s audit of Lehman Brothers
saying it complied with US GAAP and that the standard required and
allowed REPO 105.

In an interview with Bloomberg, Turley did
however say the Lehman Brothers case shows there is a need for the
reform of the system and that more disclosure is necessary.

“I think it is clear that a reform of the
system was needed and we have seen since Lehman failed a lot of
changes in financial reporting standards, disclosure standards, SEC
standards around MDN, so we are confident that Lehman both complied
with accounting standards, and that is what the investigations have
said, and also we are disclosing properly,” Turley said.

A civil lawsuit filed in December by New York
attorney general Andrew Cuomo alleges that E&Y “substantially”
helped Lehman mislead investors from 2001 until the bank’s collapse
in 2008, by approving a move that temporarily reduced Lehman’s
debt, giving the impression the bank was in a stronger financial
position than it was.

The lawsuit is the first legal action taken by
the US government involving the Lehman Brothers’ bank collapse.