Exploring Corporate Governance Around the World

By Allison Garrett, Senior Vice President for Academic Affairs at Oklahoma Christian University

Tuesday, July 24, 2007

New Going Concern Court Decision

The Seventh Circuit recently affirmed dismissal of a suit against Ernst & Young this week in an opinion available here (http://www.ca7.uscourts.gov/fdocs/docs.fwx?submit=rss_sho&shofile=06-3366_020.pdf). EY's audit opinion on the status of its client's financials in FYE 1995 did not did not contain a going concern qualification. And, in fact, EY's client did not go into bankrupcy until 2 years later. The trustee in bankrupcy sued EY on theories of negligence and breach of contract for failing to include a going concern qualification in its opinion.

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