Ernst & Young audit partners got too close to key clients at two public companies, the Securities and Exchange Commission alleged as it fined the auditor $9.3 million. The SEC said it was the first case of its kind. A senior partner working on the audit of a New York-based public company maintained an improperly close friendship with the chief financial officer, and another partner working in the audit of a second public company was romantically involved with its chief accounting officer, according to the SEC's investigation. EY didn't admit or deny the findings. Auditors are prohibited from getting too close to clients because that violates independence rules that are intended to ensure audit firms maintain their objectivity and impartiality during audits. Ernst & Young misrepresented to the public in audit reports issued with the companies' financial statements that it had maintained its independence throughout these audits, the SEC said. EY's independence procedures did not specifically ask about close personal relationships with clients that could impair the firm's independence. In both cases the SEC alleged EY partners became aware of the inappropriate relationships but took no action.
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