PracticeAuditPCAOB to carefully scrutinise securities valuations in accounts

PCAOB to carefully scrutinise securities valuations in accounts

The PCAOB is to closely examine valuations during its scrutiny of the accounts audited by the firms for 2007

Auction rate securities and collateralised debt offerings, which have proved
difficult to value, are to be examined by the US audit watchdog.

Banks in the US and other companies have experienced problems in valuing the
CDOs and securities, linked to the subprime mortgage crises and widespread
writedowns which led to massive losses.

The Public Company Accounting Oversight Board’s director of inspections
George Diacont said the valuations would be closely examined by the board during
its examination of the accounts by the firms for 2007, Reuters reported.

‘We identify a high risk portion of the audits and inspect that slice of it.
The valuation of certain investment vehicles such as collateralised debt
offerings, auction rate securities… are high risk from an inspection
perspective Off-balance sheet transactions also fall into that category,’
Diacont said.

The complex securities which have become difficult to value constitute
structured finance products made up of residential mortgage-backed securities as
well as structured investment vehicles.

Further reading:

Use fair value but disclose more – Fitch

‘Complexity’ to blame for credit crunch

UBS first bank sued over sub-prime loss

Related Articles

PwC replaces EY as Domino's auditor

Audit PwC replaces EY as Domino's auditor

5d Alia Shoaib, Reporter
The ‘uncomfortable truth’ behind FRC’s Big Four fines recommendations

Audit The ‘uncomfortable truth’ behind FRC’s Big Four fines recommendations

2w Carl Johnson, Stephensons
BDO holds off Big Four to retain top position as AIM auditor

Audit BDO holds off Big Four to retain top position as AIM auditor

2w Alia Shoaib, Reporter
FRC urged to fine Big Four firms penalties over £10m

Audit FRC urged to fine Big Four firms penalties over £10m

3w Alia Shoaib, Reporter
EY to audit Standard Chartered bank

Audit EY to audit Standard Chartered bank

1m Alia Shoaib, Reporter
KPMG replaces PwC as Croda auditor

Accounting Firms KPMG replaces PwC as Croda auditor

2m Emma Smith, Managing Editor
EY fined £1.8m over Tech Data audit

Accounting Standards EY fined £1.8m over Tech Data audit

2m Emma Smith, Managing Editor
Top 50+50: Firms post significant growth in new tax and audit rankings

Audit Top 50+50: Firms post significant growth in new tax and audit rankings

2m Emma Smith, Managing Editor