EY’s payment will be combined with a $140m penalty agreed to last month by the audit client, Weatherford International, as well as money collected from two charged Weatherford employees for $152m that will be returned to the investors who suffered due to the accounting fraud.

EY partner, Craig Fronckiewicz, who coordinated the audits and former tax partner, Sarah Adams, who was part of the audit engagement team have also been charged. They both agreed to suspensions to settle charges that they ignored significant red flags during the audits and reviews.

EY’s audit team failed to spot Weatherford’s fraud for more than four years even though the audits were placed in a high risk category.

EY was aware of post-closing adjustments that Weatherford was making to lower its year-end provision for income taxes each year, but relied on the company’s explanations rather than carrying out an audit to check the company’s accounting.

Andrew Ceresney, director of the SEC’s Division of Enforcement, said: ‘Audit and national office professionals must appropriately address known deficiencies in their auditing of high-risk areas, and auditors must have the fortitude to refuse to sign off on an audit if important issues remain unresolved.

‘Ernst & Young failed to ensure that material post-closing accounting adjustments were justified by appropriate audit evidence, leading to a significant audit failure.’