Ernst & Young (E&Y) audits of Ventas, a real estate investment trust (REIT) in the healthcare sector, will have to be redone for the years ended December 31, 2012 and 2013, along with a review for the quarter ended March 31, 2014. This unfortunate and costly required effort results from E&Y’s determination that the work was performed while there was an inappropriate personal relationship between an E&Y partner (who was not the senior partner who signed the reports) and Ventas’ chief accounting officer and controller. As a result, E&Y must withdraw its opinions since such a relationship violates auditor independence rules. No other issues are alleged regarding the accuracy of the financial statements.
Ventas dismissed E&Y and hired KPMG as its new auditor, tasked with re-doing the entirety of the audit work surrounding these previously issued financials. Both the E&Y partner and the Ventas executve involved were terminated by their respective employers and the Ventas CFO will be staying on past his announced retirement date in order to bring the matter to a close.