Homestore Changes Auditors

Homestore Inc. said Monday that it had fired its outside accounting firm, PricewaterhouseCoopers, nearly two years after the Westlake Village-based online real estate company ousted its founding managers because of a phony-revenue scheme.

In a Securities and Exchange Commission filing, Homestore said it replaced Pricewaterhouse with Ernst & Young on Sept. 29.

Spokesmen for Homestore and Pricewaterhouse couldn’t be reached for comment, but the companies told the SEC that they had no disagreements over accounting, disclosures or auditing procedures.

Eleven former Homestore executives have pleaded guilty to roles in a scheme that used advertising deals with other companies to allow Homestore to book its own funds as revenue.

Pricewaterhouse has denied wrongdoing, saying it was the first to detect the questionable transactions. But a shareholder lawsuit has accused the auditing firm of ignoring “improper revenue recognition practices” in order “to continue earning lucrative fees.”

A knowledgeable company source said Homestore’s board was unhappy that Pricewaterhouse didn’t discover the fraud earlier. An internal company investigation found no evidence that the auditors had colluded in the scheme.