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Source:
Accountingweb.com
AccountingWEB.com - Oct-19-2004 -
Washington's insurance commissioner is seeking millions of dollars from
accounting firm Ernst & Young for its alleged neglect in overseeing
finances at Metropolitan Mortgage & Securities.
Insurance Commissioner Mike Kreidler,
acting as the court-appointed receiver of Western United Life Assurance
Co. - a Met Mortgage affiliate - filed the lawsuit in Spokane County
Superior Court on Thursday, the Associated Press reported.
Kreidler took control of Western United
in March, a month after Metropolitan and its sister company, Summit
Securities, filed for bankruptcy. The insurance company lost money
because Ernst & Young failed to follow accounting and auditing
standards, the lawsuit says. The suit seeks unspecified millions of
dollars, court costs and the costs to rehabilitate Western United.
"Ernst & Young failed to do its
job, so it's my duty as receiver to pursue legal action to protect
Western United and its policyholders," Kreidler said in a
statement.
Samuel Maizel, the U.S. Bankruptcy
Court-appointed investigator in the collapse of Met Mortgage, issued a
report noting that PricewaterhouseCoopers LLP and Ernst & Young were
"likely negligent in the performance of their duties."
PricewaterhouseCoopers audited the
company's fiscal 2000 books. Ernst & Young produced audits in 2001
and 2002 but resigned, saying it couldn't trust numbers provided by the
company.
The examiner has criticized Ernst &
Young for failing to stop Metropolitan's practice of using last-minute
deals to show end-of-year profits. |