http://www.bloomberg.com/news/articles/2015-10-14/ernst-young-confronts-madoff-s-specter-in-trial-over-audits?cmpid=twtr1
By Sophia Pearson
Bloomberg.com
October 14, 2015
Ernst & Young LLP took Bernie Madoff at his word when it signed off on
audits of a fund that helped feed the biggest Ponzi scheme in U.S.
history.
The firm must now defend that decision at the first trial of an auditor
over losses tied to Madoff, who’s serving a 150-year prison term for
stealing billions of dollars from thousands of investors. FutureSelect
Portfolio Management Inc., which lost $112 million in its investment in
the feeder fund, says Ernst & Young was reckless in its review. The
purported assets weren’t just exaggerated; they didn’t even exist,
FutureSelect says.
Ernst & Young calls its sign-off reasonable based on generally accepted
auditing standards, which the firm “scrupulously” followed. The case boils
down to second-guessing a review that can provide only “reasonable
assurance” that a client’s financial statements are correct, the firm
says.
“No audit of a Madoff-advised fund could have detected this Ponzi scheme,”
Amy Call Well, an Ernst & Young spokeswoman, said in an e-mailed
statement. “EY was not the auditor of any Madoff entity, we were among the
many auditors of funds that chose to use Madoff as their investment
adviser.”
[...]
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