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Thread: IBRC to sue Ernst & Young over their work with Anglo Irish Bank

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    Politics.ie Member Sync's Avatar
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    Default IBRC to sue Ernst & Young over their work with Anglo Irish Bank

    The Times have quite the story today: http://www.irishtimes.com/newspaper/...327259386.html

    The State-owned bank, now called Irish Bank Resolution Corporation, said the case relates to the firm’s role as auditors before the bank’s nationalisation but it would not elaborate on the details of the action. The bank issued the legal proceedings on Tuesday, according to High Court records.

    Ernst & Young signed off the bank’s accounts for the year to the end of September 2006 on December 5th, 2006. These accounts are believed to be crucial to the bank’s legal action.

    Ernst & Young has been criticised for failing to spot the full extent of the borrowings of Anglo chairman Seán FitzPatrick, which had been concealed by the bank for eight years.

    IBRC said the action was part of its continuing work to wind down the former Anglo and Irish Nationwide, and deal with “legacy issues across every area of those institutions” before and after their nationalisation.
    Ernst And Young have issued a brief statement:

    Although Ernst & Young is aware of proceedings issued by IBRC [formerly Anglo Irish Bank], we have not formally been served with nor have we received a statement of claim setting out the details of IBRC’s claim
    Big move this. It's the first time an Irish bank have taken action against an audit firm in this manner, and I can't think of another bank in Europe that's done it either. The argument's going to be that the firm failed in their duty of care to the Anglo stakeholders by failing to spot the shambles the books were in despite auditing them for years and charging close to €10 million.

    If nothing else, if it goes ahead it will bring to light much of the goings on in Anglo's finance team, answering a lot of the questions people have around that period. It'll probably be of more use than any Govt run banking inquiry would be.
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    The bank sues the auditors for not spotting something the bank had or, perhaps had not, done?

    Seems daft.

    I could understand a group of disaffected former shareholders doing it, but the bank?

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    Moderator NYCKY's Avatar
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    This is indeed an interesting development but not sure what IBRC hope to achieve with this.

    Auditors reports are meant to be independent assessments and carry a lot of weight that people rely on for investing, lending etc and Ernst & Young being one of the big four, their name on the financials in theory adds credence.

    That said auditors have 4 opinions that they give,
    unqualified - in their opinion everything appears okie dokie,
    qualified - generally ok but something may be different from the norm,
    adverse - material misstatements and not to be relied upon
    a disclaimer - basically insufficient information on which to make a judgement.

    The vast majority of auditors opinions are unqualified ( I look at financial statements all the time and rarely have encountered anything but unqualified) and while I don't know (but I assume) that the E&Y give Anglo unqualified opinions there is that disclaimer about "reasonable assurance" and we all know that Fitzpatrick has been arrested a few times since those financial statements were audited.

    In the wake of the Enron/Worldcom/Global Crossing etc scandals of a decade ago auditors and record keeping standards have been strengthened significantly primarily through the Sarbanes Oxley legislation.

    I don't have all the details on the suit but I don't think E&Y will be too worried.

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    A Family member is head of finance at a large multinational and for years has been giving examples of highly paid audit advice that he's certain is illegal, but he has to send it up the food chain and the answer is always the same. Do we have written proof of advice, Yes, well that's good enough. Now this E&Y competitor handles all corporation auditing worldwide.

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    Politics.ie Member Amnesiac's Avatar
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    Quote Originally Posted by ShoutingIsLeadership View Post
    The bank sues the auditors for not spotting something the bank had or, perhaps had not, done?

    Seems daft.

    I could understand a group of disaffected former shareholders doing it, but the bank?
    Exactly. Action by Anglo shareholders makes sense, but it is very curious that it's coming from the bank.

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    Politics.ie Member flavirostris's Avatar
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    Quote Originally Posted by ShoutingIsLeadership View Post
    The bank sues the auditors for not spotting something the bank had or, perhaps had not, done?

    Seems daft.

    I could understand a group of disaffected former shareholders doing it, but the bank?
    But it's not really the same bank is it? IBRC is just what remains of Seanie's FF cowboy bank.
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    Is the day of reckoning here for the boys who would not cry wolf?
    The management consultants who charge you a fortune to say what you want them to say?

    hurrah
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    I agree E&Y won't be too worried but this move has to be welcomed anyway. Now if we could just get someone to sue a major law firm we would really be making progress.
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    Quote Originally Posted by Sync View Post
    The Times have quite the story today: IBRC takes case against Anglo auditors - The Irish Times - Thu, Nov 29, 2012



    Ernst And Young have issued a brief statement:



    Big move this. It's the first time an Irish bank have taken action against an audit firm in this manner, and I can't think of another bank in Europe that's done it either. The argument's going to be that the firm failed in their duty of care to the Anglo stakeholders by failing to spot the shambles the books were in despite auditing them for years and charging close to €10 million.

    If nothing else, if it goes ahead it will bring to light much of the goings on in Anglo's finance team, answering a lot of the questions people have around that period. It'll probably be of more use than any Govt run banking inquiry would be.

    The inbred financial and political cesspool that is Ireland will make a half hearted example of one or two, and that will be it. How many companies with whom Anglo had a relationship, had relatives who owed big time?

    It's now six years since these accounts were signed off, four since the shebeen B&B operation was discovered, and still we have tentative moves from the five point planners with a vested interest in the political 'soft landing' which ensures their gravy train is always on time.

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    Politics.ie Member Clanrickard's Avatar
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    Quote Originally Posted by macedo View Post
    I agree E&Y won't be too worried but this move has to be welcomed anyway. Now if we could just get someone to sue a major law firm we would really be making progress.
    You cannot sue you legal representation as far as I know. For obvious reasons,

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