Lehman Bros

In: Business and Management

Submitted By knickerbockerkid
Words 1194
Pages 5
Lehman Brothers Holdings, Inc. 1) Ernst and Young was acting as the independent auditor for Lehman and not as consultant. Therefore, I do not feel that Ernst and Young had a direct responsibility in being involved with the developmental process of the Repo 105 accounting policy.

The party who would be labile for implementing Repo 105 would be management and not the independent auditors. AU 110 discuses responsibilities and functions of the independent auditor, it clearly states how management is in charge of creating accounting policies and not the external auditors. The role of the auditor would come in after the accounting policies have been made by management, it would be there job to evaluate the policies that were set in place and to make evaluations on whether or not everything complied with GAAP, that no illegal accounting tactics were being used, and that due diligence has been applied to the audit. Where the auditor did fail, was that they had received a whistleblower letter from a former employee about how certain liabilities were severely misstated and they failed to bring that…...

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