CFO
Menu
  • Accounting & Tax
  • Banking & Capital Markets
  • Growth Companies
  • Human Capital & Careers
  • Risk & Compliance
  • Strategy
  • Technology
  • Sign InSign Up
CFO
  • Conferences
  • Webcasts
  • Research
  • White Papers
  • Jobs
  • Training
  • Newsletters
  • Magazine
CFO
The Ongoing Evolution of FP&A
Global Survey Identifies 7 Key Insights
How to Spot a Fraudulent M&A Target
Here are some of the red flags of fraud that CFOs…
Does Diversity Pay Off?
CFOs Look to Quantify Inclusion Initiatives
  • Accounting & Tax
  • Banking & Capital Markets
  • Risk & Compliance
  • Human Capital & Careers
  • Growth Companies
  • Strategy
  • Technology
Accounting & Tax

American Express Fires Ernst & Young

The financial-services giant parts with its long-time auditor to take up with PwC.

Stephen Taub
November 30, 2004 | CFO.com | US
share
Tweet
Print

Email this article

Officials at American Express Co. have dismissed outside auditor Ernst & Young (E&Y) in favor of PricewaterhouseCoopers (PwC), thus ending an audit relationship dating back to 1975.

“The audit committee’s decision to replace the current auditors was made after a robust proposal process that included three of the four major international accounting firms, including E&Y,” Amex officials said.

Recommended Stories:
  • World Bank Approves $13B Paid-in Capital Hike
  • Claire’s Stores Joins Retail Bankruptcy Parade
  • Twitter Moves Into the Black With $91M Profit

Executives at American Express said E&Y will audit the 2004 financials and PwC will audit the 2005 reports.

In explaining the change, Amex officials said they had no disagreements with E&Y on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. If that were the case, and the disagreements were not resolved to E&Y’s satisfaction, the auditor would have had to make reference to the problems in their reports. According to Amex, there have been no “reportable events” during the two most recent fiscal years and through November 22, 2004.

In 2003, Amex shelled out $23 million to E&Y in audit fees, and $3.5 million for other services. The audit fee was the largest paid by any U.S.-based E&Y client, according to the Wall Street Journal, which cited Audit Analytics.The Journal reported that an E&Y spokesman declined to comment on the reasons the firm was dropped, but said the audit firm would work to make sure that “a seamless transition” takes place.

E&Y has been in the Securities and Exchange Commission’s (SEC) cross-hairs for about a year, including one probe into whether the audit firm violated federal auditor independence rules by entering a so-called profit-sharing agreement in the 1990s with Amex’s travel-service unit, the Journal reported.

In court filings, the SEC cited the travel-unit contract as evidence of possible widespread compliance problems regarding auditor independence rules at E&Y, the paper reported. The court documents concerned a disciplinary proceeding against E&Y over its business relationship with another client, PeopleSoft Inc.

The SEC also cited other internal E&Y documents that said the firm had “strategic partnering relationships” with Amex and other audit clients, according to the Journal. In April, the administrative law judge overseeing E&Y’s disciplinary proceedings wrote that she gave the little weight to the documents when she ruled to bar the auditor from accepting new publicly traded audit clients for six months.

Amex spokeswoman Judy Tenzer told the Journal that the travel-contract issue had “no bearing on our decision whatsoever.” Asked why the company’s audit committee dropped E&Y in favor of PwC, Tenzer cited PwC’s “industry experience in our areas of financial services and insurance.”

Post navigation

← Updates: AIG, Time Warner, CalPERS
Capital Choices: The 2004 Capital-Spending Scorecard →

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Advertisement

Popular Articles

  1. 10 Habits of Highly Effective CFOs
  2. No Mystery How to Restrain Health Costs
  3. Zero-based Budgeting Is Surging
  4. Pay Ratio Disclosures Mislead Investors
  5. No More Tax Deductions for Bad Actions
Advertisement
 

Topics

  • Accounting & Tax
  • Banking & Capital Markets
  • Human Capital & Careers
  • Growth Companies
  • Risk & Compliance
  • Strategy
  • Technology

Media

  • Videos
  • Whitepapers
  • Research
  • Magazine

Events

  • Conferences
  • Argyle Events
  • Webcasts

Services

  • Reprints
  • Back Issues
  • Mobile
  • Widgets
  • RSS

About CFO

  • About CFO
  • Editorial Staff
  • Press
  • Advertise
  • Contact Us

Want the Magazine?

Relax and unplug with our award-winning coverage.

Subscribe Now
Follow Us