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October 22, 2009

News Briefs

LEGAL

ICAEW hits E&Y UK with £40,000 fine

The Institute of Chartered Accountants in England and Wales (ICAEW) has slapped Ernst & Young (E&Y) UK with a £40,000 ($64,000) fine for issuing unqualified audit reports in 2001 and 2002.

The firm was ordered to pay costs of £17,020 relating to the audit of ‘Company X’ as the audit had not been conducted in accordance with Statement of Auditing Standard 400, Audit evidence.

The institute claimed that on two occasions the firm did not obtain sufficient audit evidence on which to base its audit opinion in respect of market and client debtors and creditors.

E&Y said in a statement that it had fully co-operated with and assisted the ICAEW throughout its investigation.

FINANCIAL RESULTS

Deloitte US revenue takes a dive

Deloitte US, the world’s largest accounting firm, has reported a decline in revenue and workforce size in the year to 31 May 2009.

The firm reported revenue of $10.7 billion, which is 3 percent less than last year’s results.

Deloitte shed more than 2,000 staff to end the financial year with a workforce of 42,367, which included 2,968 partners and 33,605 professionals.

Although overall staff figures dropped, the number of partners increased marginally and the number of CPAs at the firm rose 2 percent.

The firm’s fee split continues to shift more towards consulting services at the expense of audit.

In 2007, audit contributed 44 percent of the fee split but in 2009 it dropped to 37 percent.

Over the same period consulting grew from 30 percent to 37 percent of revenue.

FINANCIAL CRISIS

Big Four earn £19m from government scheme

KPMG, Ernst & Young (E&Y) and PricewaterhouseCoopers (PwC) have all earned millions of pounds from work related to the UK government plans to insure the risky assets of two banks.

The Big Four firms have earned almost £19 million ($30 million) for their work related to the government’s asset protection scheme (APS), with KPMG earning £6.5 million, E&Y £4.3 million and PwC £4.2 million.

Part-nationalised Royal Bank of Scotland and Lloyds Banking Group plan to insure about £585 billion of their risky assets through the APS.

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