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The PCAOB Is the Latest Headache for Ernst & Young

Charlie Gasparino is on E&Y like stink on a monkey this week. After reporting yesterday that the SEC may eventually get around to charging Dick Fuld and/or Ernst & Young for the accounting hijinks at Lehman Brothers, CG is now reporting that the PCAOB is asking all kinds of questions that E&Y would rather not answer.

Not exactly great news from CG so we emailed E&Y spokesman Charlie Perkins to see what’s what. He declined to comment and said the firm would not be releasing a statement related to this report.

We also called up the PCAOB to get their take and spoke with Colleen Brennan, Deputy of Director of Public Affairs, who said that the Board is prohibited from discussing these matters and provided us with the details:

The PCAOB cannot comment on whether it is investigating a particular registered accounting firm or a particular public company audit by a firm. The Board, however, takes all allegations of improper professional conduct by a registered public accounting firm seriously and considers all information relating to such allegations.

PCAOB investigations and contested contested disciplinary proceedings are confidential under the Sarbanes-Oxley Act. The PCAOB’s inventory of enforcement matters includes audits of all sizes and varying complexity, including matters related to audits by large firms for issuer audit clients involved in the financial crisis.

So no one is talking. Fine, we’ll just have to take Charlie at his word. What we do know is that if the Board does decide to lay the smackdown on E&Y, they’re going to tell the entire universe about it via its “Disciplinary Orders,” and as CG notes in his report, if the PCAOB does bring an action against E&Y it will be the highest profile enforcement action in its short history. Not exactly a BusinessWeek list.

Ernst & Young Probed Over Role in Lehman Bankruptcy [FBN]