As we all know, audits can only do so much. It's entirely reasonable for a large, global firm to miss a few million bucks stashed away somewhere and if the entity being audited just happens to need a government bailout to keep from bringing down the entire economy, well don't blame the auditors.
Fair enough. But what happens when the audit firm that missed hidden money ends up being the firm to clean up the aftermath? According to the disciplinary committee of the Chartered Accountants Regulatory Board in Ireland, that's not a conflict of interest or anything:
The body that regulates accountants says Ernst & Young has no "conflict of interest" case to answer following a complaint over the firm being hired to work for the former Anglo Irish Bank after it had acted as the bank's auditor before the collapse of the bank.
It followed a complaint from the directors of a business taken into receivership by two Ernst & Young partners over debts to Anglo, two years after the accountancy practice stood down as auditors of the bust lender.
The complaint centred on the view that borrowers suffered adverse consequences because they took loans from Anglo on the basis of the apparent clean bill of health given to the bank before it had to be bailed out by taxpayers at a cost of more than €30bn.
The subsequent hiring of Ernst & Young to recover those loans therefore reflected a potential conflict of interest, according to the complaint.
Oh and if you don't know this story already, the former Anglo Irish Bank — now lovingly referred to as Irish Bank Resolution Corporation after a 2009 government bailout — sued Ernst & Young for failing to discover 87 million euro worth of hidden loans. That lawsuit is still waiting in the wings but EY! stands by its work and promises to "vigorously defend" itself. We're sure they mean that.