Top auditing firms, including Ernst and Young (E&Y), are in court to defend their previous practices of pocketing substantial amounts of travel discounts they were able to screw out of hire car companies, airlines and hotels. For the most part, the discounts were available as the firms did big business travelling around for clients. Trouble is, the discounts did not find their way back to the clients, who were charged the expenses at the full market rate.
According to The Wall Street Journal, E&Y, KPMG and PricewaterhouseCoopers (PwC) have all confirmed that it was their practice to bill clients at the full market rate for travel expenses, but claim that this meant that they were able to charge clients less by way of hourly-rate for work billed. All three firm are facing court action in Arkansas, USA, accused of fraudulently overbilling clients.
The extent of the overbilling is said to run into hundreds of millions of pounds over a period of several years. According to E&Y's internal records, the firm obtained $98.8m in airline discounts alone from 1995 - 2000. E&Y and KPMG started passing on all travel rebates to clients in 2002, while PwC adopted the new practice the year before.