[ISN] Ernst & Young Confronts Madoff’s Specter in Trial Over Audits

www.bloomberg.com/news/articles/2015-10-14/ernst-young-confronts-madoff-s-specter-in-trial-over-audits?cmpid=twtr1 By Sophia Pearson Bloomberg.com October 14, 2015 Ernst & Young LLP took Bernie Madoff at his word when it signed off on audits of a fund that helped feed the biggest Ponzi scheme in U.S. history. The firm must now defend that decision at the first trial of an auditor over losses tied to Madoff, who’s serving a 150-year prison term for stealing billions of dollars from thousands of investors. FutureSelect Portfolio Management Inc., which lost $112 million in its investment in the feeder fund, says Ernst & Young was reckless in its review. The purported assets weren’t just exaggerated; they didn’t even exist, FutureSelect says. Ernst & Young calls its sign-off reasonable based on generally accepted auditing standards, which the firm “scrupulously” followed. The case boils down to second-guessing a review that can provide only “reasonable assurance” that a client’s financial statements are correct, the firm says. “No audit of a Madoff-advised fund could have detected this Ponzi scheme,” Amy Call Well, an Ernst & Young spokeswoman, said in an e-mailed statement. “EY was not the auditor of any Madoff entity, we were among the many auditors of funds that chose to use Madoff as their investment adviser.” […]