WASHINGTON, July 14 (Xinhua) -- The U.S. Securities and Exchange Commission (SEC) on Monday charged Ernst & Young, one of the Big Four accounting firms, with violations of auditor independence rules and the company agreed to pay more than 4 million U.S. dollars to settle the case.
The SEC said in a statement that a subsidiary of Ernst & Young lobbied congressional staff on behalf of two audit clients and such lobbying activities were prohibited under the SEC's auditor independence rules.
"Auditor independence is critical to the integrity of the financial reporting process. When an auditor acts as an advocate for its audit client, that independence is compromised," said Scott Friestad, associate director in the SEC's Division of Enforcement. "Ernst & Young engaged in lobbying activities that constituted improper advocacy and clearly violated the rules."
While Ernst & Young had issued a written independence policy intended to provide guidance on the provision of legislative advisory services to audit clients, but it didn't provide any formal, in-person training on that policy to staff, the SEC added.
Ernst & Young finally agreed to pay over 4 million dollars to settle the charges with the U.S. regulator, the SEC said.