Despite Ban on New Clients, E&Y Hired

SEC hasn't yet determined when Ernst & Young's new-client time-out will go into effect.
Stephen TaubApril 26, 2004

When is a suspension not a suspension? When it hasn’t gone into effect yet.

That’s what Ernst & Young found last week, when Jos. A. Bank Clothiers replaced its auditor, KPMG, with E&Y. In a filing with the Securities and Exchange Commission, the company reported that the decision to make the change was approved by the audit committee of the board of directors of the company.

Recently, however, E&Y was banned from accepting new clients for six months. The reason that the auditor could take on the clothier’s business was that the penalty hadn’t gone into effect yet, the Baltimore Business Journal reported, citing an E&Y spokesperson. The SEC will determine when the penalty takes effect, according to the firm’s representative.

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KPMG was Bank’s auditor for the years ended February 1, 2003, and January 31 of this year, according to the publication. The company’s previous auditor was now-defunct Arthur Andersen.

In its regulatory filing, Bank reported that it hadn’t encountered any reportable accounting disagreements with KPMG. The company also said it hadn’t consulted with E&Y about accounting principles for a specific transactions or the type of audit opinion the firm might render on Bank’s financials.

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