Refco scandal won't hurt accountancy firm

Grant Thornton, the accountant facing lawsuit threats over the role it played as auditor to Refco, has claimed that any legal costs incurred will be absorbed thanks to the financially sound position of the firm.

Chief executive Edward Nusbaum said: 'We anticipate the legal costs will be expensive, as they are in every case. But Grant Thornton is very sound financially and any legal costs will be absorbed by the firm.'

The number five accounting firm was the first to warn futures and commodities broker, Refco, of 'significant deficiencies' in its internal controls before the decision was made to float the company on the New York Stock Exchange in August.

Grant Thornton warned Refco that formal procedures for closing the books were lacking and its finance functions were not large enough to meet reporting demands.

The accountancy firm has defended its position, insisting that it was misled by Refco management, including former CE Philip Bennett who is currently being charged with fraud.

Edward Nusbaum continued: 'We want to find out exactly what happened. I think companies are judged by how they deal with these situations because, even with Sarbannes-Oxley, there's no guarantee of catching all fraud.'

Regulators and banks have now begun their attempt to salvage Refco after a $430m bad-debt scandal triggered one of the fastest slides to insolvency of any financial company.