Ernst & Young, one the largest and most prestigious accounting firms in the country, has agreed to pay the SEC $4 million to settle charges of illegally lobbying Congress. Though in the institutional role of independent auditor, Ernst & Young employees lobbied congressional staff on behalf of two of their clients providing “prohibited legislative advisory services.”
Independent auditors are not supposed to be advocates for their clients, let alone lobby Congress on their behalf. In this case a subsidiary of Ernst & Young, Washington Council EY (WCEY), compromised that independence by seeking special favors for clients from Congress including:
- WCEY sent letters signed by a senior executive of an Ernst & Young audit client to congressional staff, urging passage of certain legislation.
- WCEY asked congressional staff to insert language into a bill that was favorable to the business interests of an Ernst & Young audit client.
- WCEY met with congressional staff in order to defeat legislation detrimental to the business interests of an Ernst & Young audit client.
- WCEY asked third parties to approach a U.S. senator in order to seek support for a legislative amendment sought by an Ernst & Young audit client.
- WCEY marked up a draft of a bill by inserting an Ernst & Young audit client’s language and sending it to congressional staff.
Talk about full-service accounting. Not only will Ernst & Young do your taxes they will lobby to change tax law for your benefit.
Though the activities cited occurred in 2009 Ernst & Young said “We regret these instances that arose many years ago and are pleased to put this matter behind us.” In 2012 the company finally stopped doing lobbying for clients that were public companies.
Of course, part of the agreement apparently included not naming the clients for which Ernst & Young had illegally lobbied Congressr, nor how much Ernst & Young was paid to lobby for them. I would guess more than $4 million.