Comments on: Lehman collapse looming in June: When did auditors know? http://www.sequenceinc.com/fraudfiles/2008/12/01/lehman-collapse-looming-in-june/ Thu, 18 Mar 2010 05:52:34 +0000 http://wordpress.org/?v=2.9.1 hourly 1 By: Auditors worried about litigation over the financial meltdown « Curiously Inspired http://www.sequenceinc.com/fraudfiles/2008/12/01/lehman-collapse-looming-in-june/comment-page-1/#comment-180835 Auditors worried about litigation over the financial meltdown « Curiously Inspired Mon, 09 Feb 2009 09:47:36 +0000 http://www.sequence-inc.com/fraudfiles/?p=2999#comment-180835 [...] For those involved in this matter, one of the key questions is whether E&Y knew how bad Lehman’s affairs really were in the run-up of the latter filing for bankruptcy on 15th Sept 2008. Worse still is a fleck of suspicion - which needs to be proven in court - that E&Y might have used some creative accounting techniques to cover up the bad state of affairs in the last sets of accounts. For more info check click here. [...] [...] For those involved in this matter, one of the key questions is whether E&Y knew how bad Lehman’s affairs really were in the run-up of the latter filing for bankruptcy on 15th Sept 2008. Worse still is a fleck of suspicion – which needs to be proven in court – that E&Y might have used some creative accounting techniques to cover up the bad state of affairs in the last sets of accounts. For more info check click here. [...]

]]> By: Big 4 Life http://www.sequenceinc.com/fraudfiles/2008/12/01/lehman-collapse-looming-in-june/comment-page-1/#comment-173134 Big 4 Life Tue, 02 Dec 2008 00:05:03 +0000 http://www.sequence-inc.com/fraudfiles/?p=2999#comment-173134 Correct - EY had a responsibility as part of its audit procedures to evaluate Lehman as a going concern, and it is hard to imagine that they could have missed what was happening at Lehman during the audit. Remember, as part of a going concern assessment the auditor has the opportunity to interface with management to see what types of initiatives they are putting into place to mitigate the concern. Perhaps EY did have a going concern issue with Lehman, however it could be possible that they considered management’s plans to fix the issue adequate. I don't think we should be so quick to throw them under the bus and group them with Arthur Anderson. Correct – EY had a responsibility as part of its audit procedures to evaluate Lehman as a going concern, and it is hard to imagine that they could have missed what was happening at Lehman during the audit.

Remember, as part of a going concern assessment the auditor has the opportunity to interface with management to see what types of initiatives they are putting into place to mitigate the concern. Perhaps EY did have a going concern issue with Lehman, however it could be possible that they considered management’s plans to fix the issue adequate. I don’t think we should be so quick to throw them under the bus and group them with Arthur Anderson.

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