Auditor to face liability in Lehman case?

The 2,200-page post-humous examiner's report about Lehman Brothers (Lehman Brothers news) and what eventually killed it off contained some harsh words for a number of people, including the auditors. The New York Times says the fallout from the report "has created a potential legal liability for its former accounting firm, Ernst & Young."

The court-appointed examiner Anton Valukas took Ernst & Young to task for the accounting maneuvers it seemed to sanction, finding "enough evidence to support at least three claims against the accounting firm for not looking more closely into Lehman's use of questionable accounting." Ernst &Young's audits were governed by Sarbanes-Oxley (Sarbanes-Oxley news).

So far, the firm says it has done nothing wrong. However, two Ernst partners, William Schlich and Hillary Hansen, met with a Lehman executive named Matthew Lee, who had complained in a letter to senior managers about accounting improprieties. While some issues were apparently corrected, not much else happened. The firm said the firm did not finish its review of the charges before the firm filed for bankruptcy. There is likely more to this story. 

For more:
- here's the New York Times article

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