AADB investigating events at Lehman Brothers
16 June 2010
The Accountancy and Actuarial Discipline Board has begun an investigation under its Accountancy Scheme into the conduct of Members and of Ernst & Young LLP, as auditors to Lehman Brothers International Europe.
The scope of the investigation is as follows:
“The conduct of Members and a Member Firm in relation to: (a) the preparation and audits of the financial statements of Lehman Brothers Holding Inc and UK operations including Lehman Brothers International (Europe) for the year ended 30th November 2007; and (b) the use and accounting treatment of transactions known as “Repo 105s” and “Repo 108s” by Lehman Brothers Holdings Inc and UK operations including Lehman Brothers International (Europe).”
This decision was taken following consultation with the Institute of Chartered Accountants of England and Wales (ICAEW).
Notes to Editors
The Financial Reporting Council (FRC) is the UK’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment. Its functions are exercised principally by its operating boards (the Accounting Standards Board, the Auditing Practices Board, the Board for Actuarial Standards, the Financial Reporting Review Panel, the Professional Oversight Board, and the Accountancy and Actuarial Discipline Board). The Committee on Corporate Governance, whose members are drawn from the Board of the FRC, assists it in its work on corporate governance.
The Accountancy and Actuarial Discipline Board ("AADB") is the independent, investigative and disciplinary body for accountants and actuaries in the UK. The AADB is responsible for operating and administering independent disciplinary schemes for these professions. The Accountancy Scheme covers Members of the following accountants' professional bodies:- the Association of Chartered Certified Accountants, the Chartered Institute of Management Accountants, the Chartered Institute of Public Finance and Accountancy, the Institute of Chartered Accountants in Ireland, the Institute of Chartered Accountants of Scotland and the Institute of Chartered Accountants in England and Wales. The Actuarial Scheme covers Members of the Faculty of Actuaries in Scotland and the Institute of Actuaries (collectively referred to as the Actuarial Profession).
The focus of the AADB is on cases which raise important issues affecting the public interest; other disciplinary cases will continue to be dealt with by the relevant professional body. The purpose of an investigation is to determine whether there is evidence of misconduct on the part of Members or Member Firms of the professional bodies. An investigation does not always mean that an allegation has been made or that there is evidence of misconduct on the part of the Member or Member Firm involved.
Disciplinary complaints filed following an AADB investigation are heard by an independent Tribunal which will normally sit in public. If the Tribunal upholds a complaint, there is a wide range of sanctions which it can impose including an unlimited fine, exclusion from membership of a professional body covered by one of the Schemes and withdrawal of practising certificates or licenses.
Document created under a former FRC operating body.