Ernst and Young has been embroiled in some big accounting scandals over the last year. Luckin Coffee and Wirecard were both multi-billion dollar frauds that were audited by EY.
The Wall Street Journal published an article highlighting the reasons why.
“EY had ties with executives and board members at some of its troubled audit clients. In some cases, former EY partners sat on the companies’ boards, including on their audit committees.
The second reason is that EY has a bigger client base of fast growing tech companies. The supposition is that companies that are on the verge of going public might have more reason to cook the books.
“The U.K.’s accounting watchdog, in its annual assessment of auditors this past summer, said EY auditors need to be more skeptical. “There should be more emphasis on challenge of management” at audit clients, said the regulator, the Financial Reporting Council. Two of EY’s clients with accounting issues were listed in London.