On Monday, Michigan Attorney General Mike Cox and Treasurer Robert Kleine announced a $109 million settlement with Ernst & Young resulting from audits the firm conducted that allegedly failed to expose massive fraud taking place when E&Y served as HealthSouth Corporation’s auditing firm. According to Cox, “the settlement is one of the largest ever obtained against an outside auditor in a class-action securities fraud case and will benefit the State of Michigan’s pension fund and members of the class action against Ernst & Young.”
The class action case alleged accounting errors and irregularities against E&Y, including overstating financial statements and failing to conduct audits that were in compliance to generally accepted auditing standards for HealthSouth. In 2006, the Attorney General announced a $445 million settlement with HealthSouth as a result of the fraud and losses to pensioners and investors nationwide.
