26 (Bloomberg) - James Turley, chief executive officer of Ernst & Young LLP, talks about President Obama's State of the Union address. Turley, speaking with Bloomberg's Erik Schatzker at the World Economic Forum meeting in Davos, Switzerland, also comments on New York Attorney General Andrew Cuomo's lawsuit against the accounting firm. Deirdre Bolton also speaks.
On whether a simplified tax code would hurt Ernst & Young:
"No, we wouldn't fight it all. I think making sure the U.S tax code is simplified, but is also globally competitive, is a really important step so we would be very supportive of that. We would adjust as need be, but it's really important to be globally competitive."
On the lawsuit former NY Attorney General Andrew Cuomo is bringing against Ernst & Young and how E&Y could have approved Repo 105:
"I think it's important to put Lehman's failure into context. It was the result of a global financial meltdown, huge mortgage defaults, asset values falling, a liquidity crisis, and it wasn't just Lehman. There would have been numbers of financial institutions filing chapter 11 if not for the actions of government. I think it's clear, though, that reform of the system is needed, and we've seen since Lehman failed a lot of changes in financial reporting standards, disclosure standards, SEC standards are on MDN, so we're confident that Lehman complied with accounting standards, and that's what the investigations have said, and also we're disclosing properly."
"We are not pleased to be in the spotlight like this."
Turley on how Ernst & Young addresses the issue with clients:
"We actually just educate [Ernst & Young clients] with the facts, that the Repo 105's were accounted for as they were, because that's what US GAAP required…In fact, the Lehman accounts under IRIFs were properly stated as were the ones under the US GAAP. I think it's important there be a lot more disclosure, and that's what is coming out of both the SEC changes and the changes from the standard setters."
Source: Bloomberg Television