Schlich

Mr. Schlich's attorney said Ernst and Lehman had concluded multiple times over several years that the accounting for Repo 105 transactions was acceptable under accounting standards.

Lehman Auditor May Bear The Brunt Steve Eder 2011

Without harm to shareholders or improper accounting, Mr. Schlich's attorney said, there is no "legitimate basis for being critical of Mr. Schlich's conduct."

Lehman Auditor May Bear The Brunt Steve Eder 2011

But a week before their meeting, Mr. Schlich told his superiors in an email that he didn't expect Mr. Lee's charges would change how Lehman reports its results, according to a copy of the email that was included in the bankruptcy examiner's report.

Lehman Auditor May Bear The Brunt Steve Eder 2011

A month later, William J. Schlich Jr ., the lead Ernst & Young partner in charge of auditing Lehman's books, interviewed Mr. Lee about his allegations.

Lehman Auditor May Bear The Brunt Steve Eder 2011

"Mr. Lee confirmed repeatedly during his interview with Mr. Schlich that he was unaware of any material error in Lehman's financial reporting."

Lehman Auditor May Bear The Brunt Steve Eder 2011

His attorney, Larry Robbins , said in a statement that Mr. Schlich applied the accounting rules that existed at the time.

Lehman Auditor May Bear The Brunt Steve Eder 2011

The meeting where Repo 105 was discussed was one of three occasions in which Mr. Schlich and other Ernst auditors held conversations about Lehman's use of the accounting practice, according to the attorney general's complaint and the bankruptcy examiner's report.

Lehman Auditor May Bear The Brunt Steve Eder 2011

His letter, which alleged "unethical and unlawful conduct," was referred by Lehman's audit committee to Mr. Schlich.

Lehman Auditor May Bear The Brunt Steve Eder 2011

No individual auditor, including Mr. Schlich, has been named as a defendant in the attorney general's complaint.

Lehman Auditor May Bear The Brunt Steve Eder 2011

That year, Lehman discussed the transactions with outside auditors from Ernst, including Mr. Schlich, and Mr. Schlich testified that Ernst became "comfortable" with the firm's use of Repo 105, according to the examiner's report.

Lehman Auditor May Bear The Brunt Steve Eder 2011