E&Y to Pay $125M to Settle Claims Over Failed Illinois Bank

Ernst & Young LLP will pay $125 million to settle claims stemming from its involvement in the failure of an Illinois savings bank, according to a consent order with the Office of Thrift Supervision.


AccountingWEB is pleased to bring you tools that can help systematize the accounting department of a small company, corporate business or a public accounting firm. Over 200 accounting department policy templates, written in Microsoft Word format by PolicySoft, are available individually or in groups for immediate download.

Accounts Payable General Accounting Department
Accounts Receivable General Ledger
Credit & Collections Payroll
Fixed Assets Shipping & Receiving

The Big Four accounting firm will pay $85 million to the Federal Deposit Insurance Corp., which served as receiver for the failed Superior Bank FSB of Hinsdale, Ill., Reuters reported. Ernst & Young, which audited the bank, will also pay $40 million in restitution to the FDIC.

The Office of Thrift Supervision, or OTS, closed Superior in 2001, saying the thrift had become "critically undercapitalized, largely due to incorrect accounting treatment and aggressive assumptions in its valuation of residual assets in the securitization of subprime mortgage loans."

In December of 2001, Superior Bank's owners agreed to pay the FDIC $460 million over 15 years to settle any potential claims. When the bank failed, it had about $2 billion in assets.

Ernst & Young said it has already made changes to the way it audits savings and loan associations to comply with the OTS consent order, and is implementing the changes throughout its entire bank audit practice. The changes include dedicating more technical resources to the practice and strengthening "our client acceptance and reacceptance procedures," spokesman Charles Perkins told Reuters in New York.

Ernst & Young did not admit or deny that its audits in the Superior Bank case failed to comply with any professional accounting standards. The firm said it was settling to cooperate with regulators and to ensure the firm had “the strongest policies and procedures to serve our clients and the public interest."

You may like these other stories...

Here's a CPA who truly walks the walk. On March 15, Frank Ryan, CPA, departed San Diego, California, with plans to be in Ocean City, Maryland, by July 2 to teach a course at the Maryland Association of CPAs’ (MACPA...
When Theodore J. Flynn first joined the Massachusetts Society of CPAs (MSCPA) in 1970, it was a different world and a different profession.  The "Big Eight" were still headquartered in Boston. Vietnam War...
Accountant Rickey Charles Goodrich had it a little too good. Many bean counters would kill to serve as financial guru to the likes of Pearl Jam. Goodrich was hired in 2005, and the following year, he became the CFO of Curtis...

Upcoming CPE Webinars

Jul 23
We can’t deny a great divide exists between the expectations and workplace needs of Baby Boomers and Millennials. To create thriving organizational performance, we need to shift the way in which we groom future leaders.
Jul 24
In this presentation Excel expert David Ringstrom, CPA revisits the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both boost the integrity of your spreadsheets, but reduce maintenance as well.
Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.