Ernst & Young Settles Audit Negligence Claim

Ernst & Young Hong Kong has paid to resolve a claim of between HK$250 million and HK$300 million that the liquidators of Moulin Global Eyecare had threatened to launch against it, reports the South China Morning Post. Ernst & Young was Moulin's auditor between 2002 and 2004.


According to the Post, Moulin, a manufacturer of eyewear, ended in the High Court in 2006 amid fraud allegations, owing lenders HK$2.7 billion. The firm's liquidator, Ferrier Hodgson, alleges that Moulin fraudulently inflated its revenues. Ferrier Hodgson believed Moulin's actual business was much smaller.


The terms of Ernst & Young's settlement are confidential but a source says the accounting firm's local operations paid "substantially less" than Ferrier had threatened to seek.


In a separate civil action, Moulin's creditors are suing accountant KPMG for HK$471 million over its role as Moulin's auditor between 1999 and 2002, reveals the Post. Meanwhile, no criminal proceedings have been launched against Ernst & Young in relation to Moulin.


In September Akai's liquidator, Borrelli Walsh, accused Ernst & Young in the High Court of faking legal evidence to shield itself from a US$1 billion audit negligence claim.


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