PeopleSoft faces accountancy probe

NEWS PeopleSoft is facing an embarrassing inquiry over its relationship with its auditor, Ernst & Young. PeopleSoft had a partnership with Ernst & Young from 1994 to 2000, to sell its CRM and ERP software to Ernst & Young's clients. It's alleged that this may have given the accounting giant an incentive to be less than 100 per cent impartial when auditing the software company's accounts. The Securities and Exchange Commission has strict rules on the relationships companies can have with their auditors. It is seeking a ruling banning Ernst & Young from working for PeopleSoft, and wants the firm to repay its audit fees. Ernst & Young sold its consulting business in 2000, and the SEC's accusations concentrate on the period from 1994 to 1999. Ernst & Young said in a statement: "We are surprised and disappointed that the SEC has chosen to take action on this matter. Our conduct was entirely appropriate and permissible under the profession's rules." The accounting profession has been under intense scrutiny since the collapse of energy giant Enron brought alleged malpractice at the firm's auditors, Arthur Andersen, to the fore. PeopleSoft is not named in the SEC's suit and there is no suggestion that the software company is guilty of misbehaving, but the move will embarrass one of the better performing companies in the ebusiness sector.