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Auditor Liability
NEW YORK- A court-appointed examiner investigating the collapse of Lehman Brothers Holdings Inc. accused the firm of using artificial accounting devices to temporarily move assets off its books and said its auditor, Ernst & Young, might be at fault for not challenging the absence of some disclosures, including Lehman's use of the accounting device.
The 2,209-page report, not counting four volumes of appendices, was prepared by court-appointed examiner and Jenner & Block LLP partner Anton Valukas. It scrutinized the circumstances surrounding the Lehman bankruptcy. In part, the report concluded business decisions that may have helped instigate Lehman's bankruptcy "may have been in error but were largely within the business judgment rule."
Allegations in the report on the September 2008 bankruptcy might expose the bankrupt firm's former officers and its former external auditor to litigation hazards, financial services lawyers told BNA March 11.
Use of 'Accounting Device.' The report asserted that Lehman, in order to move assets off its balance...