Ernst & Young is being sued by the Irish Bank Resolution Corporation (IBRC), the state-owned body that took over the management of failed Anglo Irish bank in 2009.
Papers were filed at the High Court in Dublin by IBRC over the alleged failings of E&Y when it was auditor to the collapsed bank.
The Big Four firm has vowed to "vigorously defend" itself against its accuser and the role it played in the bank's collapse - a move that the Republic of Ireland's then finance minister, Brian Lenihan, said it would bring down the whole country and saddle its beleagured taxpayers with a €34bn (£27.5bn) bailout noose. That figure has since been revised to around €25bn.
The bank has been under investigation for fraud for the past four years. Three former executives, including ex-chief Sean FitzPatrick, face charges next year. The bank allegedly provided loans to customers so that they could purchase shares in the bank and use deposits from yet another lender to hide the size of massive withdrawals.
In February 2009 E&Y withdrew its December 2008 audit report of Anglo's September 2009 financial statement and issued a new audit report. Deloitte replaced it as the bank's auditors the following year.
E&Y has already sustained a two-year industry probe into its part in the scandal. John Purcell the former Irish comptroller & auditor general, ruled that the auditors did have "a case to answer". Disciplinary action has been postponed due to request from the Director of Public Prosecutions.
In May 2011 E&Y unsuccessfully tried to stop the inquiry saying it "fundamentally disagrees" with the views and that "no adverse finding" had been made against it.IBRC appears to have made its move on Tuesday in a bid to beat a six-year limitation period , which , if missed, would have halted the action. The accounts for the bank for the year to September 2006, were signed off on 5 December 2006.
E&Y said: 'Although Ernst & Young is aware of proceedings issued by IBRC, we have not formerly been served with, nor have we received, a statement of claim setting out the details of IBRC's claim.
'Without more detail it is difficult for us to comment further. We have consistently said we stand by the quality of our work performed in the Anglo audit and will vigorously defend any such proceedings.'
Earlier this year, IBRC issued proceedings against ex-Irish Nationwide chief executive Michael Fingleton and other former board members in March in a similar move that beat a legal deadline that would have barred a case.
IBRC's legal challenge against E&Y echoes moves by the administrators of Quinn Insurance against their former auditors, PwC.