02
Oct
How ironic that the government attempts to protect consumers with more and more regulation on lenders, yet the basic purpose of the regulation is not being met.
Accounting firms are supposed to issue 'going concern' opinions, warnings that must be attached to annual reports when there is a risk a company may not survive. Auditors failed to warn of troubles of many large banks and other companies that collapsed in the credit crisis. The Financial Accounting Standards Board has been considering a proposal that would put more pressure on companies themselves to issue going-concern warnings; the Public Company Accounting Oversight Board, meanwhile, is reviewing the standards for auditors.
Below is a list of some of the largest U.S. companies that filed for bankruptcy during the credit crisis and a listing as to whether they received a going-concern warning from their auditors.
|
COMPANY
|
BANKRUPTCY YEAR
|
ASSETS ($BILLIONS)
|
GOING CONCERN WARNING
|
|
Lehman Brothers
|
2008
|
691.0
|
No
|
|
Washington Mutual
|
2008
|
327.9
|
No
|
|
General Motors
|
2009
|
91.0
|
Yes
|
|
CIT Group
|
2009
|
80.4
|
No
|
|
Thornburg Mortgage
|
2009
|
36.5
|
Yes
|
|
IndyMac Bancorp
|
2008
|
32.7
|
No
|
|
General Growth
|
2009
|
29.6
|
Yes
|
|
Lyondell Chemical
|
2009
|
27.4
|
No
|
|
New Century
|
2007
|
26.1
|
No
|
Source: Audit Analytics and Bankruptcydata.com
