I used to play poker with one of the executives of this PeopleSoft some years ago. Never liked the guy, nor the game. The game is non-cooperative, so I got bored fast. Did not lose much though.
Best, Sabri ++++++++++++++++++++ 05/20 18:38 Ernst & Young Charged With Audit-Independence Abuses (Update2) By Neil Roland Washington, May 20 (Bloomberg) -- Ernst & Young LLP, the fourth-largest accounting firm, was charged by regulators with compromising the independence of its audits of PeopleSoft Inc. by entering a business venture with the software company. The Securities and Exchange Commission alleged that Ernst and PeopleSoft jointly developed and marketed a software product from 1994 to 2000. During this period, Ernst also was auditing the Pleasanton, California-based company's finances. Ernst is contesting the case. "Our conduct was entirely appropriate and permissible under the profession's rules," Ernst spokesman Les Zuke said. "The issues the SEC has raised are purely technical in nature." The five largest accounting firms have come under increased federal scrutiny following Enron Corp.'s bankruptcy and auditor Arthur Andersen LLP's failure to detect the energy trader's accounting irregularities. New York-based Ernst is charged with audit-independence violations and improper professional conduct -- allegations less serious than fraud. The SEC wants the accounting firm to return its PeopleSoft audit fees, which amounted to less than $1 million a year, for the six-year period. The government isn't seeking fines. Independence "Impaired" "When an auditor enters into a joint business relationship to generate revenue, its independence is fundamentally impaired," SEC Enforcement Director Stephen M. Cutler said. Under the arrangement, Ernst obtained a license from PeopleSoft to use the software product and the client's trademarks. The accounting firm agreed to pay PeopleSoft royalties of as much as 30 percent for each sale of the product, with a minimum payment of $300,000, the SEC order said. A PeopleSoft spokeswoman didn't respond to a request for comment. SEC spokesman Christi Harlan didn't respond to a question about whether SEC Chairman Harvey Pitt and SEC Chief Accountant Robert Herdman recused themselves from this case. Pitt represented Ernst on SEC issues while a lawyer in private practice, and Herdman was a senior partner at Ernst in the 1990s. "Given the flak that Pitt has taken recently, they are unlikely to show any leniency toward Ernst & Young," said Douglas Carmichael, a Baruch College accounting professor. The SEC could require PeopleSoft to have its financial statements re-audited for the years in question, Carmichael said. Pitt has been questioned by lawmakers from both parties about his meeting with KPMG Chairman Eugene O'Kelly last month, at the same time that KPMG was under investigation for its audit of Xerox Corp. O'Kelly said he "briefly referenced" Xerox audits in his discussion with Pitt, without mentioning the former client's name. Pitt, who represented KPMG while in private practice, denied discussing the inquiry at the meeting. This is the second auditor-independence case brought against Ernst by the SEC in recent years. In 1995, the accounting firm settled an SEC complaint by agreeing to comply with auditor independence standards. PeopleSoft shares fell $1.85 to $21.84 today and are down 46 percent this year.
