The Auditors Attempt to Explain
By Marian Wang, ProPublica – March 25, 2010 4:18 pm
Ever since we began following the storyline of “Repo 105”, a sly balance-sheet maneuver performed by Lehman Brothers that helped it hide billions in dodgy assets, we noted that Lehman auditor Ernst & Young had some explaining to do. That explaining has begun.
The Contrarian Pundit
Contrarian Pundit posted a letter that Ernst & Young sent out yesterday, defending itself: not to the media, but to its clients. Check out both pages of the letter (PDFs).
A Few More Choice Bits
Lehman’s bankruptcy was the result of a series of unprecedented adverse events in the financial markets. The months leading up to Lehman’s bankruptcy were among the most turbulent periods in our economic history. Lehman’s bankruptcy was caused by a collapse in its liquidity, which was in turn caused by declining asset values and loss of market confidence in Lehman. It was not caused by accounting issues or disclosure issues.
Assessment
While no specific disclosures around Repo 105 transactions were reflected in Lehman’s financial statement footnotes, the 2007 audited financial statements were presented in accordance with US GAAP, and clearly portrayed Lehman as a leveraged entity operating in a risky and volatile industry. In other words, we at Ernst & Young didn’t point out that Lehman was doing things to hide its risks, but you should’ve known Lehman was in trouble anyway. Felix Salmon points out that at least they’re no longer denying that they knew about Repo 105.
Link: http://www.propublica.org/ion/blog/item/more-on-lehman-and-repo-105-the-auditors-attempt-to-explain
Conclusion
And so, your thoughts and comments on this ME-P are appreciated.
Get our Widget: Get this widget!
Our Other Print Books and Related Information Sources:
Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759
Physician Financial Planning: http://www.jbpub.com/catalog/0763745790
Medical Risk Management: http://www.jbpub.com/catalog/9780763733421
Healthcare Organizations: www.HealthcareFinancials.com
Health Administration Terms: www.HealthDictionarySeries.com
Physician Advisors: www.CertifiedMedicalPlanner.com
Subscribe Now: Did you like this Medical Executive-Post, or find it helpful, interesting and informative? Want to get the latest ME-Ps delivered to your email box each morning? Just subscribe using the link below. You can unsubscribe at any time. Security is assured.
Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos
Sponsors Welcomed: And, credible sponsors and like-minded advertisers are always welcomed.
Link: https://healthcarefinancials.wordpress.com/2007/11/11/advertise
Filed under: Ethics, Investing, Portfolio Management, Research & Development | Tagged: Contrarian Pundit, Ernst & Young, Felix Salmon, GAAP, Lehman Brothers, Lehman’s bankruptcy, Marian Wang, Repo 105 transactions, Richard Fuld |
Accounting Tricks
The Securities and Exchange Commission [SEC] is examining whether any of the 19 largest US banks are using an accounting trick that a bankruptcy examiner said led to the collapse of Lehman Brothers, according to SEC Chairman Mary Schapiro.
http://www.msnbc.msn.com/id/36649691/ns/business-economy_at_a_crossroads
Frank
LikeLike
Lehman Accounting Practice
Here is an easy to understand video explaining Lehman Brothers’s Repo 105 accounting practice.
Kempton
LikeLike
Lehman Bros
Insufficient Accountability in Corporate Governance
http://tumblr.com/xlwfv7g8d
The Worden Report
LikeLike
“L” 8 Years Later
http://www.msn.com/en-us/money/markets/8-years-after-lehmans-fall-wall-street-is-still-reeling/ar-BBwba78?li=BBnbfcN
Espinosa
LikeLike
Banking Redeux
A Decade After Bear’s and Lehman’s Collapse, the Seeds of Instability Are Germinating Again
http://www.msn.com/en-us/money/markets/a-decade-after-bears-collapse-the-seeds-of-instability-are-germinating-again/ar-BBKd57t?li=BBnbfcN
Dr. David Marcinko MBA
LikeLike