Brace yourselves, we’ve got a positive story about accountants, specifically auditors. Taylor, Bean, & Whitaker, filed bankruptcy on Monday after some strange goings on in the past month between the lender and the purchaser of its loans, Colonial Bank.
More, after the jump
The collapse came, at least partially, due to some very pesky Deloitte auditors who were calling TBW on their shenanigans. Per the WSJ:
Edward Corristan, the Deloitte & Touche LLP partner who headed the audit, was uncomfortable with the way Taylor Bean was accounting for foreclosed properties, according to a court filing and people familiar with the matter…Deloitte believed that employees of Taylor Bean and Colonial “had engaged in potentially inappropriate communications” about accounting for the foreclosed homes, according to a filing by Taylor Bean in connection with its bankruptcy case. With Ginnie Mae’s deadline for filing an audited financial statement approaching, Taylor Bean agreed to hire the law firm Troutman Sanders LLP to investigate Deloitte’s concerns. Meanwhile, Deloitte suspended its audit.
When TBW missed their deadline for filing with Ginnie, they had some explaining to do:
That task fell to Paul R. Allen, a former Fannie Mae executive who had served as chief executive of Taylor Bean since 2003…On July 6, Mr. Allen wrote a letter to Ginnie stating that there were no unresolved issues between Taylor Bean and Deloitte, according to the court filing. The letter hadn’t been reviewed by Mr. Farkas, Deloitte or Taylor Bean’s legal counsel, the filing said…Ginnie then met with Deloitte, learned of its concerns and decided that Mr. Allen’s letter was misleading. On Aug. 4, the Department of Housing and Urban Development, which oversees Ginnie and the FHA, suspended Taylor Bean’s authority to make or service FHA-insured loans. HUD said Deloitte had found “certain irregular transactions that raised concerns of fraud.”
Deloitte declined to comment, as it is their policy not to, on client matters. Okay but we’ll say, pret-tay, pret-tay, prety-tay good job Deloitte. Our faith has been restored. For now.
For Lender, a Fast Fall From Audit to Collapse [WSJ]
Some might call Joe Francis a genius. Others may call him a pig. Regardless, the IRS is calling him a scofflaw tax evader. His defense strategy will entail an elaborate slideshow that will explain that Francis is the “business of sex” and that most of what he’s doing are business expenses.
Do we need to say anything else? Ok, we’ll say a little.