The National  Memo Logo

Smart. Sharp. Funny. Fearless.

Monday, December 09, 2019 {{ new Date().getDay() }}

WASHINGTON (Reuters) – Ernst & Young will pay $11.8 million to settle charges over “failed audits” of oil services company Weatherford International Plc , the U.S. Securities and Exchange Commission said on Tuesday.

An Ernst & Young partner who coordinated the audits and a former tax partner who was part of the audit team were also charged in the SEC’s order, the agency said in a statement. Under the settlement, both men agreed to “suspensions to settle charges that they disregarded significant red flags during the audits and reviews,” the SEC said.

The charges follows $140 million penalty imposed on Weatherford’s announced last month to settle charges of inflating its earnings.

An spokeswoman for Ernst & Young, which neither admitted nor denied the SEC’s findings, could not be reached for comment.

The SEC found that Ernst & Young classified Weatherford audits as high-risk but repeatedly failed to detect the company’s fraud until it had continued for more than four years.

The Ernst & Young audit team knew of accounting adjustments that Weatherford was making to significantly lower the amount it set aside at the end of each year for income taxes, the SEC said.

But the auditors relied on Weatherford’s “unsubstantiated explanations” instead of performing required audit procedures to scrutinize Weatherford’s accounting, the SEC said.

(Reporting by Susan Heavey; Editing by Mohammad Zargham and Steve Orlofsky)

Photo: The Ernst & Young building rises above Times Square in New York June 18, 2014. REUTERS/Lucas Jackson

Start your day with National Memo Newsletter

Know first.

The opinions that matter. Delivered to your inbox every morning

Photo by Village Square/ CC BY-NC 2.0

Reprinted with permission from The American Prospect

The barriers to amending the Constitution are so high that I've long thought it pointless to pursue any reform that way. But after four years of Donald Trump, I've changed my mind. In fact, I'm suffering from a bout of what Kathleen Sullivan in 1995 in these pages called "constitutional amendmentitis."

Sullivan—later dean of Stanford Law School—used the term for conservatives' feverish advocacy of amendments in the mid-1990s. The amendments would have, among other things, imposed a balanced federal budget, limited congressional terms, authorized laws banning flag-burning, given the president a line-item veto, and outlawed abortion. It was a good thing those amendments didn't receive the necessary two-thirds approval in both houses of Congress, much less ratification by three-fourths of the states.

Keep reading... Show less