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GAO REPORT: Improvements Are Needed in Internal Control over Financial Reporting for the Troubled Asset Relief Program

GAO REPORT: Improvements Are Needed in Internal Control over Financial Reporting for the Troubled Asset Relief Program


What GAO Found

During fiscal year 2011, OFS addressed several of the internal control issues related to the significant deficiency we reported for fiscal year 2010 concerning its accounting and financial reporting processes. However, remaining uncorrected control deficiencies along with other control deficiencies that we identified in this area in fiscal year 2011 collectively represented a continuing significant deficiency in OFS’s internal control over its accounting and financial reporting processes. Specifically, while OFS improved its review and approval process for preparing its financial statements, notes, and Management Discussion and Analysis (MD&A) for TARP for fiscal year 2011, we continued to identify incorrect amounts and inconsistent disclosures in OFS’s draft financial statements, notes, and MD&A that were significant, but not material, and that were not detected by OFS. For fiscal year 2011, we also identified deficiencies in other OFS accounting and financial reporting procedures related to: (1) recording of noncash transactions, (2) recording of warrant adjustments, and (3) accounting for Public-Private Investment Fund (PPIF) equity distributions.

OFS had other controls over TARP transactions and activities that reduced the risk of misstatements in its financial statements resulting from these deficiencies. For significant errors and issues that were identified, OFS revised the financial statements, notes, and MD&A, as appropriate.

In addition to the significant deficiency, we identified a less-significant control deficiency relating to key patches8 that were not in place for the server9 supporting OFS’s subsidiary ledger. During fiscal year 2011, OFS addressed the three less-significant control deficiencies that existed as of September 30, 2010, and that we reported in our April 2011 management report.10

We are making three new recommendations related to OFS’s continuing significant deficiency and one related to the less-significant control deficiency. Further, our work showed that OFS had completed corrective action on 10 of the 13 recommendations that remained open at the end of the fiscal year 2010 audit, and corrective actions were in progress on the three remaining recommendations.

Why GAO Did This Study

The Emergency Economic Stabilization Act of 2008 (EESA) requires that we annually audit the financial statements of the Troubled Asset Relief Program (TARP), which are prepared by the Department of the Treasury’s (Treasury) Office of Financial Stability (OFS). On November 10, 2011, we issued our audit report including (1) an unqualified opinion on OFS’s financial statements for TARP as of and for the fiscal years ended September 30, 2011 and 2010, and (2) an opinion that OFS maintained effective internal control over financial reporting as of September 30, 2011. We also reported that our tests of OFS’s compliance with selected provisions of laws and regulations for the fiscal year ended September 30, 2011, disclosed no instances of noncompliance.

Our November 2011 audit report concluded that although certain internal controls could be improved, OFS maintained, in all material respects, effective internal control over financial reporting as of September 30, 2011, that provided reasonable assurance that misstatements, losses, or noncompliance material in relation to the financial statements would be prevented or detected and corrected on a timely basis. Our audit report also identified a continuing significant deficiency

in OFS’s internal control over its accounting and financial reporting processes.

This report presents (1) detailed information concerning underlying new control deficiencies that contributed to the continuing significant deficiency identified in our audit report, along with related recommendations for corrective actions; (2) a less-significant control deficiency that we identified during our audit, along with a related recommendation for corrective action; and (3) the status, as of November 4, 2011, of corrective actions taken by OFS to address the 13 recommendations that remained open at the end of the fiscal year 2010 audit and were detailed in our April 2011 management report. While the deficiencies we identified are not considered material weaknesses, they nonetheless warrant management’s attention and action.

What GAO Recommends

The four new recommendations presented in this report are in addition to those we have made as part of the series of reports issued on our ongoing oversight of TARP.

For more information, contact Gary T. Engel at (202) 512-3406 or engelg@gao.gov.

Status Legend:

More Info

  • In Process
  • Open
  • Closed – implemented
  • Closed – not implemented

Recommendations for Executive Action

Recommendation: The Assistant Secretary for Financial Stability should direct the Chief Financial Officer (CFO) to revise OFS’s procedures related to recording and review of noncash transactions, to include requirements for the individual performing the quarterly noncash transactions analysis to provide adequate supporting documentation for the entire analysis and for the reviewer to review this information along with the entire Noncash Transaction Report to ensure that all necessary noncash transactions are identified and properly recorded in the general ledger.

Agency Affected: Department of the Treasury: Office of Financial Stability

Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Assistant Secretary for Financial Stability should direct the CFO to establish a mechanism for the effective implementation of the review process for recording warrant adjustments.

Agency Affected: Department of the Treasury: Office of Financial Stability

Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Assistant Secretary for Financial Stability should direct the CFO to develop and implement written procedures to provide reasonable assurance that PPIF equity distributions are properly recorded in the general ledger in accordance with OFS’s adopted accounting methodology.

Agency Affected: Department of the Treasury: Office of Financial Stability

Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Assistant Secretary for Financial Stability should establish procedures for coordinating with the Treasury Chief Information Officer to ensure the timely installation of patches to the Core Information Transaction Flow (CITF) system.

Agency Affected: Department of the Treasury: Office of Financial Stability

Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

[ipaper docId=81497051 access_key=key-i1b6udglfyzon4ys5h6 height=600 width=600 /]

 

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BofA May Face HUD Fraud Claims for Soured Loans, Read REPORT

BofA May Face HUD Fraud Claims for Soured Loans, Read REPORT


What will happen to Angelo Mozilo?

AG’s have no idea what they are allowing to proceed in the courts, I urge them to Halt, Seize, Stop these illegal foreclosures. Bank of America is in a mad rush to get these through the court systems. Pages are missing from the filed documents to further hide the endorsed pages.

Whistle-blowers best you blow the “whistle” now!

AP-

Bank of America Corp. (BAC) should face fraud proceedings after its Countrywide unit submitted faulty data to back up claims for reimbursement on federally insured mortgages, according to an audit by a U.S. watchdog.

Half of 14 loans reviewed had “material underwriting deficiencies” concerning borrowers that resulted in more than $720,000 in losses, according to a Sept. 30 report from the Department of Housing and Urban Development’s inspector general. Kelly Anderson, a HUD regional inspector general, recommended the agency pursue legal remedies against Charlotte, North Carolina-based Bank of America, the biggest U.S. lender.

“Countrywide did not properly verify, analyze, or support borrowers’ employment and income, source of funds to close, liabilities and credit information,” Kelly wrote in the audit. “This noncompliance occurred because Countrywide’s underwriters did not exercise due diligence in underwriting the loans.”

The Federal Housing Administration, run by HUD, insures mortgages on loans to borrowers who can’t find traditional financing, such as those with low incomes. Lenders can ask the FHA to cover losses if borrowers default. The agency has stepped up scrutiny of those claims, and denials could be the next wave of expenses tied to faulty mortgages for lenders including Bank of America, FBR Capital Markets Corp. said on Oct. 3

[BLOOMBERG]

 

 

COUNTRYWIDE DID NOT COMPLY WITH HUD REPORT

 

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Goldman Sachs Said to Get Subpoena From New York Prosecutor

Goldman Sachs Said to Get Subpoena From New York Prosecutor


BLOOMBERG:

Goldman Sachs Group Inc. (GS), the fifth- biggest U.S. bank by assets, received a subpoena from the Manhattan District Attorney’s office seeking information on the firm’s activities leading into the credit crisis, according to two people familiar with the matter.


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Goldman should be worried about subpoenas

Goldman should be worried about subpoenas


“I think we found a white elephant, flying pig and unicorn”

REUTERS

Goldman Sachs Group Inc (GS.N) executives have good reason to be worried about the risk of receiving subpoenas from the Justice Department, and investors should be concerned too.

The U.S. government has a real chance of finding inconsistencies between Goldman executives’ testimony to Congress and their internal documents, which means subpoenas could turn into something more serious, lawyers said.

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THE SARBANES-OXLEY ACT OF 2002 by Robert A. McTamaney

THE SARBANES-OXLEY ACT OF 2002 by Robert A. McTamaney


WILL IT PREVENT FUTURE “ENRONS?”


Click image below to continue to WLF.org’s PDF

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NEW YORK’S MARTIN ACT: EXPANDING ENFORCEMENT IN AN ERA OF FEDERAL SECURITIES REGULATION by Robert A. McTamaney

NEW YORK’S MARTIN ACT: EXPANDING ENFORCEMENT IN AN ERA OF FEDERAL SECURITIES REGULATION by Robert A. McTamaney


Who’s afraid of the Martin Act? Today, the answer is most of Wall Street, and a healthy segment of
corporate America.

Click on image below to continue to WLP.org’s PDF

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TAIBBI-ROSNER-SPITZER | re: GOLDMAN Email “UTOPIA” a White Elephant, Flying Pig and Unicorn

TAIBBI-ROSNER-SPITZER | re: GOLDMAN Email “UTOPIA” a White Elephant, Flying Pig and Unicorn


Matt Taibbi, Eliot Spitzer and Joshua Rosner on CNN discuss new fraud probe of three major banks. Big banks could go out of business.

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Matt Taibbi wipes the floor with Megan McArdle re: Goldman Sachs criminality

Matt Taibbi wipes the floor with Megan McArdle re: Goldman Sachs criminality


Crooks and Liars

Matt Taibbi has a new article on Rolling Stone on the recent hearings in the U.S. Senate and whether or not Goldman Sachs executives should be facing criminal trials or not in the wake of ongoing investigations into their part in the financial meltdown we went through a few years ago. CNN decided to bring in the Atlantic Monthly’s Wall Street apologist Megan McArdle to debate Taibbi on Your Money.



© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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MATT TAIBBI | The People v. Goldman Sachs

MATT TAIBBI | The People v. Goldman Sachs


A Senate committee has laid out the evidence. Now the Justice Department should bring criminal charges

Rolling Stones-

They weren’t murderers or anything; they had merely stolen more money than most people can rationally conceive of, from their own customers, in a few blinks of an eye. But then they went one step further. They came to Washington, took an oath before Congress, and lied about it.


[image: abcnews]

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Senate Report on Meltdown Under Justice Department Review

Senate Report on Meltdown Under Justice Department Review


BLOOMBERG-

The Justice Department is reviewing a report by a U.S. Senate panel that said Goldman Sachs Group Inc. (GS) misled clients about the firm’s bets on securities tied to the housing market, according to Attorney General Eric Holder.

Holder told the House Judiciary Committee at a hearing today that the department is reviewing the April report by the Senate Permanent Subcommittee on Investigations, led by Senator Carl Levin, a Michigan Democrat. Holder didn’t say which aspects of the report, which probed the causes of 2008 financial crisis, are under review


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Internal emails indicate Deutsche Bank knew they were bankrolling toxic mortgages by Ameriquest and others

Internal emails indicate Deutsche Bank knew they were bankrolling toxic mortgages by Ameriquest and others


iWatch

In 2007, the report says, Deutsche Bank rushed to sell off mortgage-backed investments amid worries that the market for subprime loans was deteriorating.

“Keep your fingers crossed but I think we will price this just before the market falls off a cliff,” a Deutsche Bank manager wrote in February 2007 about a deal stocked with securities created from raw material produced by Ameriquest and other subprime lenders.

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Merrill Lynch Lawyer Told Eliot Spitzer: “Be Careful, We Have Powerful Friends”

Merrill Lynch Lawyer Told Eliot Spitzer: “Be Careful, We Have Powerful Friends”


Spitzer to Holder: Prosecute Goldman Sachs or Resign

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[VIDEO] Sen. Levin Grills Goldman Sachs Exec On “Shitty Deal” E-mail

[VIDEO] Sen. Levin Grills Goldman Sachs Exec On “Shitty Deal” E-mail


VIA:

Senator Carl Levin (D-MI) and former Goldman Sachs Mortgages Department head Daniel Sparks, Senate Governmental Affairs Subcommittee on Investigations hearing, April 27, 2010

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Dylan Ratigan with Louise Story of NY Times “Can We Trust The Regulators?”

Dylan Ratigan with Louise Story of NY Times “Can We Trust The Regulators?”


Dylan Ratigan with special guest New York Times’ Louise Story, discussing the 600+ page report uncovering Goldman Sachs scheme to defraud investors. According to Bloomberg, The U.S. Justice Department and regulators will have to determine whether employees and executives of Goldman Sachs Group Inc. violated any laws when they traded securities tied to the housing market and testified to Congress about the transactions, Senator Carl Levin said.

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Wall Street and the Financial Crisis: Anatomy of a Financial Collapse

Wall Street and the Financial Crisis: Anatomy of a Financial Collapse


United States Senate
PERMANENT SUBCOMMITTEE ON INVESTIGATIONS
Committee on Homeland Security and Governmental Affairs
Carl Levin, Chairman
Tom Coburn, Ranking Minority Member

WALL STREET AND
THE FINANCIAL CRISIS:

Anatomy of a Financial Collapse

~

MAJORITY AND MINORITY
STAFF REPORT

PERMANENT SUBCOMMITTEE
ON INVESTIGATIONS

UNITED STATES SENATE

April 13, 2011

In the fall of 2008, America suffered a devastating economic collapse. Once valuable securities lost most or all of their value, debt markets froze, stock markets plunged, and storied financial firms went under. Millions of Americans lost their jobs; millions of families lost their homes; and good businesses shut down. These events cast the United States into an economic recession so deep that the country has yet to fully recover.

This Report is the product of a two-year, bipartisan investigation by the U.S. Senate Permanent Subcommittee on Investigations into the origins of the 2008 financial crisis. The goals of this investigation were to construct a public record of the facts in order to deepen the understanding of what happened; identify some of the root causes of the crisis; and provide a factual foundation for the ongoing effort to fortify the country against the recurrence of a similar crisis in the future.

Using internal documents, communications, and interviews, the Report attempts to provide the clearest picture yet of what took place inside the walls of some of the financial institutions and regulatory agencies that contributed to the crisis. The investigation found that the crisis was not a natural disaster, but the result of high risk, complex financial products;  undisclosed conflicts of interest; and the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street.

While this Report does not attempt to examine every key moment, or analyze every important cause of the crisis, it provides new, detailed, and compelling evidence of what happened. In so doing, we hope the Report leads to solutions that prevent it from happening again.

Click image below to continue…

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