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Officials Balked at a Drug Company’s Tax Shelter. Auditors Approved It Anyway.


The drug company Perrigo had a problem.Consultants at the giant advisory firm EY had devised an elaborate arrangement that would allow Perrigo, one of the country’s leading makers of nonprescription drugs, to avoid more than $100 million in federal taxes. But the company’s outside auditors, at the accounting firm BDO, were questioning the setup’s propriety.Perrigo soon replaced BDO with EY as its auditor. At least one EY official, too, expressed concern that the tax shelter his colleagues had designed was overly aggressive.Even so, auditors at EY, also known as Ernst & Young, eventually blessed the transactions, which federal authorities now claim were shams, according to previously unreported documents made public in a court case last year.Accountants have a reputation as bean counters. In reali …

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