Ernst & Young sued over Lehman's collapse

Here is the big news that might trigger your interest as an auditor.

One of the Big 4 accounting firms, Ernst & Young is facing a civil lawsuit in the US over the collapse of Lehman Brothers! New York's state attorney Andrew Cumo claims that New York's state attorney Andrew Cuomo claims Ernst & Young "sat by silently" as Lehman Brothers tried to conceal billions of dollars in debt from investors before its implosion. The lawsuit says Lehman ran a "massive accounting fraud".

It is claimed that Ernst & Young approved of Lehman's increasingly frequent use of a device known as Repo 105. The lawsuit alleges: "These Repo 105 transactions had no independent business purpose and were designed solely to enable Lehman to manage the company's financial balance sheet metrics."

The case centres on Lehman's use of an accountancy practice known as Repo 105, which involves temporarily removing money from the balance sheet to give the impression of greater financial strength. Mr Cuomo mentioned that, Ernst & Young should not have approved the accounts, knowing that the practice had been used so widely.

The lawsuit seeks more than $150 million in fees that Ernst & Young received from 2001 to 2008 as Lehman's outside auditor,plus other unspecified damages

Ernst & Young has responded, and claims that the firm is going to "vigorously defend" the lawsuit.

A Death in the Family

Scowling at the now empty stage, the man sat two thirds of the way back, as the audience, laughing and chatting, left for the lobby.  It was the end of Act I of the preview of the comedy "Jitters" at the SouPepper Theatre in Toronto.  I watched the man, concentrating on the stage as though the actors were still there.  In his mind they were.  This was the man who had woven together his own experience as actor and playwright and  had run this play through his mind a thousand times as he revised and revised, boiling it down to its essence.  This was David French.

I walked over to the row he was seated in and sat down a respectful distance away, not wanting to disturb his train of thought.  I had met David through an introduction to dramatic writing course given by his partner, Glenda MacFarlane and I had emailed them a couple of times.  After a while he acknowledged my presence.  "There's a lot of work to do yet," was all he said.  This despite all of the laughter that had just come from the full house.

David was like that:  intense, passionate, uncompromising, as much a rock as the place where he had been born.  When he visited our class, we all talked about our current projects.  When I described mine, he said, "A novel maybe, not a play."  He was right.  That comment made me start over from scratch, because after listening to him, all I wanted to do was write a play.  David's approach was classical theatre:  a single protagonist with an all-consuming desire, facing overwhelming conflict and equipped with only their intelligence and feelings.  "Salt-water Moon" (http://www.davidfrench.net/salt.html) features two actors on one set in one evening.  "The challenge," he explained, "was that this story took place before my previous play, so the audience already knew the ending."  Yet, even knowing not just the ending, but also the whole play, I was still riveted to my seat.  I took my family to see it at SoulPepper.  With two teenagers, it can be difficult to find something that engages all of us.  This play was an exception.  The conversation all the way home centered around the play and the two characters.

You can picture yourself in a French play.  Whether you see yourself as the parent or the child, the young lover or the frustrated patriarch, he spoke to all of us.  Each character is presented with understanding and compassion, true to all of the frailties and strengths of the human condition.  You can't leave one of David's plays untouched by the experience.

We will miss him.