Ernst & Young paying $2M in audit settlement

WASHINGTON - The watchdog agency for the accounting industry says it has fined big firm Ernst & Young $2 million for alleged lapses in three audits of a pharmaceutical company.

The Public Company Accounting Oversight Board said Wednesday that the civil fine against the accounting firm was the largest it has levied since it began operating in 2003. At issue are audits of Medicis Pharmaceutical Corp. in 2005, 2006 and 2007.

In the settlement, the independent group also censured Ernst & Young, and it sanctioned four current and former firm partners.

In the audits, Ernst & Young failed to properly evaluate a significant element, the amount Medicis set aside to account for the cost of product returns, the PCAOB said.

Ernst & Young and the partners did not admit or deny wrongdoing.