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Accounting News Roundup: Cuomo Has Ernst & Young in the Crosshairs; PwC Report: Petters Fraud Attracted $36 Billion; Few Will Pay Estate Tax in 2011 | 12.20.10

Auditors Face Fraud Charge [WSJ]
New York prosecutors are poised to file civil fraud charges against Ernst & Young for its alleged role in the collapse of Lehman Brothers, saying the Big Four accounting firm stood by while the investment bank misled investors about its financial health, people familiar with the matter said.

State Attorney General Andrew Cuomo is close to filing the case, which would mark the first time a major accounting firm was targeted for its role in the financial crisis. The suit stems from transactions Lehman allegedly carried out to make its risk appear lower than it actually was.

Petters’ schemes drew in $36 billion, report says [MST]
This makes for lots of paper cuts, “PwC said it obtained financial data that would fill more than 560,000 bankers boxes. It said it found 87 accounts in 21 different banks that were part of the investment scheme.”

IRS Agent Accused of Stealing Tax Refunds [NBCNY]
Fern Stephens, a revenue officer at the Internal Revenue Service, is being charged by the U.S. Attorney’s office for stealing more than $160,000 in unclaimed tax funds from 12 taxpayers, according to federal court documents.

Former ECB Member Padoa-Schioppa Dies [WSJ]
Since July, Mr. Padoa-Schioppa chaired the board of trustees of the IFRS Foundation, which oversees the International Accounting Standards Board and helped promulgate the move toward a single set of accounting rules used worldwide. Sir David Tweedie, the IASB’s chairman, said in a statement Sunday that Mr. Padoa-Schioppa “possessed a rare combination of intellect and vision, delivered with a wry smile. He was a friend and colleague and will be missed by many, many people.”

Icelandic Bank Fails in $2 Billion Bid to Sue Former Execs, Auditor in New York [The American Lawyer]
A judge refused to hear Glitnir Banki’s suit against PwC and former execs.

Estate Tax Will Return Next Year, but Few Will Pay It [NYT]
Almost no one will have to worry about paying the estate tax under the tax legislation just [signed into law]. By one estimate, from Alan Rothschild, the chairman of the American Bar Association’s real property, trust and estate law section, less than one-half of 1 percent of people who die in 2011 will be hit by the estate tax. In contrast, 10.5 percent paid the estate tax in 1977.

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