New York, July 24: Barely a year ago Ernst & Young, like its peers, was racing to pick up the pieces left behind by Andersen's collapse, enjoying the windfall of new clients and talent. Since then, though, the picture has grown darker. Negative publicity from its involvement in a string of controversies has taken a toll on Ernst & Young.

After a wave of corporate scandals that undermined confidence in auditors, Ernst says it has ushered in sweeping changes to the way it does business, instituting reforms that go beyond those required by a new federal law.
Ernst has spent much of this year in the spotlight, first for setting up dubious tax shelters for Sprint Corp. executives that are now under scrutiny from the Internal Revenue Service. Then it came under more scrutiny for its role as auditor of HealthSouth Corp., the chain of rehabilitation and surgical centers that has been ensnared in an accounting scandal.
Most worrisome is the spectre of a penalty the Securities and Exchange Commission is seeking -- a six-month ban on accepting new clients. The proposed ban stems from a case in which the SEC accused Ernst of lacking enough independence when it audited the books of its former client PeopleSoft. Bureau Report