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September 13, 2011

E&Y faces formal complaint for Anglo-Irish audits

A formal complaint is expected to be filed to the Irish accounting watchdog against Ernst & Young Ireland (E&Y) in relation to its role as auditor of Anglo-Irish bank.

The formal complaint follows an extensive investigation in to the Big Four firm, which remained auditor of the bank up to 2008, by the Chartered Accountants Regulatory Board’s (CARB) former auditor general John Purcell.

Purcell told the watchdog his investigation has found, “prima faciecases against E&Y in respect of their role as auditors to Anglo Irish Bank”.

Purcell claimed that the preliminarily investigation found the auditors failed to detect the scale of Sean FitzPatrick’s loans and their systematic refinancing over year ends and the lack of appropriate disclosure in the first set of Anglo’s financial statements for the year-end 30 September 2008.

Purcell also criticised the firm for failing to refer to the transactions in September 2008 between Irish Life & Permanent and Anglo-Irish in their audit report on the first set of Anglo-Irish’s 2008 financial statements and the failure to ensure appropriate disclosure of “a loan made to William McAteer, a director of Anglo-Irish, in the first set of its 2008 financial statements or in their audit report thereon”.

E&Y said in statement it fundamentally disagrees with opinions issued by Purcell that there is a prima facie case to answer on three points under investigation.

“This is a preliminary stage of the process and, for the avoidance of doubt, there has been no adverse finding made against E&Y in respect of the audit of Anglo Irish bank. We will vigorously defend our work before a hearing of the CARB’s disciplinary panel which will consider whether or not any such criticism is justified,” E&Y said.

E&Y recently tried to challenge the investigation by Purcell at the High Court but their challenge was refused by Justice Mary Irvine in May this year.

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