Review of Botched U.S. Foreclosures Beset by Missteps, GAO Says [Bloomberg]
A $2 billion search for U.S. foreclosure errors was hampered by poor planning from the regulators who demanded it, according to a review by the Government Accountability Office. U.S. banking regulators provided insufficient guidance for the independent review of more than 4 million foreclosures by 14 mortgage servicers in 2009 and 2010, according to a draft of the report. […] The complexity of the foreclosure reviews and limitations in regulators’ guidance and monitoring of the foreclosure review challenged their ability to achieve the stated goals,” the report concluded. According to the GAO, third-party consultants hired by the servicers complained that the loan files and scope of the file review made the process “complicated and time-consuming.” The consultants — among them Promontory Financial Group LLC, Ernst & Young LLP and PricewaterhouseCoopers LLP — said some files contained as many as 50 documents, comprising more than 2,000 pages. They also reported that consultants spent as many as 50 hours to complete a full single file review.
FM digs in: "Why did so many firms have to be hired as “independent” consultants for the reviews? The OCC was acutely aware of potential auditor independence issues with the firms that also audit the banks. There were other preexisting business relationships and conflicts of interest between consulting firms, law firms and the banks. Those conflicts, at a minimum, would give the appearance of conflicts of interest if not be actual conflicts of interest. And yet the OCC allowed the biggest and most egregious independence conflict to continue – Deloitte performing the foreclosure review at JPMorgan."
German regulators probe Deutsche Bank accounting – sources [Reuters]
German regulators Bafin and Bundesbank are conducting an in-depth probe of Deutsche Bank AG's accounts over allegations the lender failed to correctly value a derivatives portfolio, two people familiar with the matter said on Thursday. They said Germany's central bank was is reacting to allegations that Deutsche Bank misvalued credit derivatives, allowing the bank to hide up to $12 billion in losses.
Don't Let the IRS Do Your Taxes [HP]
Grover Norquist doesn't like the sound of this: "The IRS has one job, and one job only — to collect taxes. It measures its success or failure in its ability to collect as much in taxes as possible. To ask the IRS to estimate the tax liability of a taxpayer is akin to asking an alcoholic how much they can have without crossing the line — the answer will always be "more." To make the tax collector the tax preparer as well invites a clear conflict of interest on the part of the IRS."
Vodafone Restates Results in Change to Accounting for Ventures [BBW]
Vodafone Group Plc (VOD) is restating its results going back two fiscal years as new international accounting rules for joint ventures cut historical revenue and earnings. Revenue for the year ended March 2012 was revised to 38.8 billion pounds ($58.4 billion) from 46.4 billion pounds, the Newbury, England-based company said today in a statement. Earnings before interest, taxes, depreciation and amortization were reduced to 11.6 billion pounds from 14.5 billion pounds.
A New York federal judge ruled Thursday that a wrongful acts exclusion saves Admiral Insurance Co. from covering Silverman Neu LLP in a class action alleging the accounting firm helped debt counseling companies commit fraud and should contribute to a $259 million judgment. […] Silverman's predecessor became entangled in the legal dispute because it prepared tax forms for the companies and carried out audits, according to the ruling. The underlying plaintiffs accused Silverman's predecessor of violating the Credit Repair Organizations Act, of hiding and misrepresenting Cambridge's and Cambridge/Brighton's tax statuses to the government, and of improperly filing tax forms reserved for nonprofits. The lawsuit sought nearly $42.8 million from Silverman, the amount that customers paid to the debt management companies in the years that Silverman provided its accounting services.