US – US pension provider TIAA-CREF is being investigated by the Securities and Exchange Commission amid the resignation of two trustees over a conflict of interest involving Ernst & Young.
The 325 billion-dollar organisation – a long-time corporate governance advocate - has now tendered for a new auditor.
“On December 6 2004 the staff of the SEC informed TIAA and the TIAA-CREF Funds that it is conducting an informal inquiry into the E&Y auditor independence matter,” said the Teachers Insurance and Annuity Association-College Retirement Equities Fund.
“TIAA and the TIAA-CREF Funds intend to fully cooperate with the SEC staff in connection with the informal inquiry.”
William Waltrip, a trustee of Teachers Insurance and Annuity Association of America, and Professor Stephen Ross, a trustee of the Lifecycle Funds and other TIAA-CREF investment companies, resigned on November 30.
At issue was their relationship with E&Y, which paid a separate company that was majority owned by Ross around 1.33 million dollars, TIAA-CREF said.
In August E&Y told TIAA-CREF that its relationship with the trustees’ company was not in accordance with regulatory standards.
Both TIAA-CREF and E&Y say the relationship “did not compromise E&Y’s independence” from TIAA-CREF as E&Y’s audit team was not aware of the business relationship.
But it said: “TIAA and the TIAA-CREF Funds will immediately begin to develop a request for proposals from accounting firms that have the requisite capacity and expertise to perform audit services for TIAA and the TIAA-CREF Funds for their respective 2005 audits.”
And they have also “taken steps to ensure that their respective trustees will identify promptly any business relationships that may bring the independence of the outside auditors into question”.
"For a combined 45 years Steve Ross and Bill Waltrip have served TIAA-CREF with dedication and integrity. We appreciate Steve and Bill's experience and insight and their contributions have been outstanding," said chairman and chief executive Herb Allison.
"TIAA-CREF credits both men for working with our companies to resolve this issue. Their action and the support it received from our boards reflect the importance our companies and trustees attach to resolving any issue affecting our organization in a manner consistent with the standards we advocate for others."
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