Replies to post #355516 on Fannie Mae-No Politics (FNMA)

[brandemarcus]

So I as an auditor do not have a role in judging 50 billion in credit loss provisions for 2009 (just Fannie alone!), and yet I am supposed to judge whether the financial statements fairly represent the actual net worth and profit in a year.
That's by far the largest expense item for the gse's in year, and yet no duty to examine the adequacy. It leads to nonsense. Why do an audit at all under those conditions? Material?! 50 billion!

[whipstick]

Auditors have to sign off on loss reserves.

So they don't have nothing to do with them.

They have to say that the methodology the mgmt used was sound.

However, you'd think a firm like PWC would know that the gov't was being overly harsh in their loss reserve projections.. so they either did a bad job or were helping them be opportunistically overly pessimistic.

HERA doesn't get to change how that works. It's an accounting rule.