Auditors only have to sign off on 10-K annual reports. The 10-Q quarterly reports used immediately prior to Amendment 3, or even the earlier conservatorship in 2008, were NOT audited.
I am familiar with auditors delving into reserves for normal items like bad debt losses based on historical data, accruals for contractual expenses for things like commitments for advertising, legal department expenses etc. I am not familiar with any accounting standard requiring auditors to assure clients remain within any provision for macro-economic data and exogenous variables like Fed changes to interest rates, government interventions such as TARP and Quantitative Easing that are not 100% predictable with any certainty.
To me, "safe and sound" conservatorship could surely and legally include building a firewall of security where any error in judgement to reserve "too much" would clearly be preferable to "too little" amidst so much global uncertainty.
Please be good enough to inform the board of which accounting standard or rule applies to confirming your opinion and invalidating mine regarding required auditing of reserve criteria applicable to a period of unprecedented financial crisis. I would also appreciate you providing the rule that requires auditors to sign off on data in10-Q reports which the government states were part of the validation process for their actions.
Thanks in advance for helping to clarify this very important question.
JMHO.
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