Big Four firm Ernst & Young has agreed to pay an $8.5m (£5.3m) settlement - one of the highest amounts ever paid by an accountancy firm - to the US regulator for its failure to recognise an accounting fraud at a fitness company. The US Securities and Exchange Commission has charged Ernst & Young, along with six of its former and current partners, for its audit of Bally Total Fitness' financial statements in 2001 to 2003. The SEC said it found Ernst & Young 'issued unqualified audit opinions', which said the company's financial statements were in line with US accounting standards, but it revealed these audit opinions 'were false and misleading'. 'It is deeply disconcerting that partners, even at the highest levels of E&Y, failed to fulfil their basic obligations to the investing public by not conducting proper audits. This case is a sharp reminder to outside auditors that they must carry out their duties with due diligence,' said Robert Khuzami, director of the SEC's division of enforcement. Ernst & Young said in a statement: 'These settlements allow us and several of our partners to put this matter behind us and resolve issues that arose more than five years ago.'