$1 billion - faz alguma diferença???????????
Enviado: 30/10/2003 19:43October 30, 2003
Fannie Mae Corrects Mistakes in Results
By JONATHAN GLATER
annie Mae announced yesterday that it had corrected errors in its most recent financial results, which in some cases varied from the correct amounts by more than $1 billion. The company attributed the errors to flawed application of new accounting standards.
As a result of the corrections reported by the company, which is the nation's largest buyer of home mortgages, its mortgage portfolio grew by $1.7 billion; its total assets by $1.04 billion; and its unrealized gains on certain securities, by $1.3 billion. The changes do not affect the company's income statement, Fannie Mae said.
"In adopting a new and complex accounting standard in a short period of time, Fannie Mae had to put in place a system and process to capture all open commitments and mark them to market," the company said in a statement. "To implement this standard, Fannie Mae utilized information from its internal, automated systems in conjunction with spreadsheets that made additional calculations necessary under the new rule." A spokeswoman said that one of those spreadsheets contained an error.
The news comes after Fannie Mae's smaller sibling, Freddie Mac, reported its own accounting woes last summer, when it released an extensive report by an outside law firm that concluded that the accounting for several transactions was intended to smooth earnings growth improperly. The regulator of the two entities, the Office of Federal Housing Enterprise Oversight, is now calling for more resources to do its job.
"This development also adds urgency to Congressional approval of the additional 2004 resources requested by the White House for O.F.H.E.O. to fund this special examination and strengthen our staff and oversight,'' Armando Falcon Jr., director for the agency, said in a statement released yesterday.
Fannie Mae's announcement also prompted harsh criticism from Representative Richard H. Baker, Republican of Louisiana, who has called for a review of accounting methods at both Fannie Mae and Freddie Mac.
"Here we go again,'' Mr. Baker said in a statement. "First Freddie, now Fannie." He added in the statement, "Before something calamitous occurs, Congress must demand professional oversight to give us the straight facts about these companies' books."
Shares of Fannie Mae fell to $73.10 after the announcement, down $2.25. In a news release on the company's Web site, Fannie Mae said that "the errors were discovered in the course of the standard review in preparation of the company's Form 10-Q for the third quarter and were primarily made in conjunction with the implementation of Financial Accounting Standard No. 149."
The company's quarterly report to the Securities and Exchange Commission will be filed on Nov. 14, the release added. The company was correcting a report filed with the S.E.C. on Oct. 16.
The financial accounting standard at issue is relatively new and took effect earlier this year, said Tom Linsmeier, chairman of the accounting department at Michigan State University.
"With some benefit of the doubt you could say, 'Oh, they didn't get it right and they're just catching up,' " Mr. Linsmeier said. But if other accounting standards are involved as well, that excuse may not hold, he added.
The statement from the regulatory agency also mentions a different standard that deals with proper accounting for investments in certain debt and equity securities.
Bert Ely, a consultant and a critic of both Fannie Mae and Freddie Mac, said that yesterday's disclosure from Fannie Mae raised a number of questions. It is unclear, he said, what the nature of the link is between the accounting standard relied on by the company and the unrealized gains on the securities held by Fannie Mae. The proper method of accounting for unrealized gains on securities, he added, has not changed.
"That is very significant and it raises a couple of questions," Mr. Ely said. "No. 1, what was the nature of the computation errors that caused that? Is it suggestive of the possibility that Fannie Mae has got some of the same kind of internal accounting problems that Freddie Mac has."
Janet L. Pennewell, vice president for financial reporting at Fannie Mae, said that there was a direct connection between the new accounting standard and the treatment of unrealized gains on securities, which are gains on securities the company holds but that it might sell.
For example, Ms. Pennewell said, if Fannie Mae pledged to buy a bundle of mortgages for a certain price on a certain date, in the past the transaction would be valued at that agreed-upon price.
Under the new standard, she said, Fannie Mae had to value the transaction at the market value of the mortgages at the time of the purchase. If the market price of the mortgages rose in the interim, that had the effect of increasing their value on Fannie Mae's books, which is why the value of the mortgage portfolio increased, she said
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Fannie Mae Corrects Mistakes in Results
By JONATHAN GLATER
annie Mae announced yesterday that it had corrected errors in its most recent financial results, which in some cases varied from the correct amounts by more than $1 billion. The company attributed the errors to flawed application of new accounting standards.
As a result of the corrections reported by the company, which is the nation's largest buyer of home mortgages, its mortgage portfolio grew by $1.7 billion; its total assets by $1.04 billion; and its unrealized gains on certain securities, by $1.3 billion. The changes do not affect the company's income statement, Fannie Mae said.
"In adopting a new and complex accounting standard in a short period of time, Fannie Mae had to put in place a system and process to capture all open commitments and mark them to market," the company said in a statement. "To implement this standard, Fannie Mae utilized information from its internal, automated systems in conjunction with spreadsheets that made additional calculations necessary under the new rule." A spokeswoman said that one of those spreadsheets contained an error.
The news comes after Fannie Mae's smaller sibling, Freddie Mac, reported its own accounting woes last summer, when it released an extensive report by an outside law firm that concluded that the accounting for several transactions was intended to smooth earnings growth improperly. The regulator of the two entities, the Office of Federal Housing Enterprise Oversight, is now calling for more resources to do its job.
"This development also adds urgency to Congressional approval of the additional 2004 resources requested by the White House for O.F.H.E.O. to fund this special examination and strengthen our staff and oversight,'' Armando Falcon Jr., director for the agency, said in a statement released yesterday.
Fannie Mae's announcement also prompted harsh criticism from Representative Richard H. Baker, Republican of Louisiana, who has called for a review of accounting methods at both Fannie Mae and Freddie Mac.
"Here we go again,'' Mr. Baker said in a statement. "First Freddie, now Fannie." He added in the statement, "Before something calamitous occurs, Congress must demand professional oversight to give us the straight facts about these companies' books."
Shares of Fannie Mae fell to $73.10 after the announcement, down $2.25. In a news release on the company's Web site, Fannie Mae said that "the errors were discovered in the course of the standard review in preparation of the company's Form 10-Q for the third quarter and were primarily made in conjunction with the implementation of Financial Accounting Standard No. 149."
The company's quarterly report to the Securities and Exchange Commission will be filed on Nov. 14, the release added. The company was correcting a report filed with the S.E.C. on Oct. 16.
The financial accounting standard at issue is relatively new and took effect earlier this year, said Tom Linsmeier, chairman of the accounting department at Michigan State University.
"With some benefit of the doubt you could say, 'Oh, they didn't get it right and they're just catching up,' " Mr. Linsmeier said. But if other accounting standards are involved as well, that excuse may not hold, he added.
The statement from the regulatory agency also mentions a different standard that deals with proper accounting for investments in certain debt and equity securities.
Bert Ely, a consultant and a critic of both Fannie Mae and Freddie Mac, said that yesterday's disclosure from Fannie Mae raised a number of questions. It is unclear, he said, what the nature of the link is between the accounting standard relied on by the company and the unrealized gains on the securities held by Fannie Mae. The proper method of accounting for unrealized gains on securities, he added, has not changed.
"That is very significant and it raises a couple of questions," Mr. Ely said. "No. 1, what was the nature of the computation errors that caused that? Is it suggestive of the possibility that Fannie Mae has got some of the same kind of internal accounting problems that Freddie Mac has."
Janet L. Pennewell, vice president for financial reporting at Fannie Mae, said that there was a direct connection between the new accounting standard and the treatment of unrealized gains on securities, which are gains on securities the company holds but that it might sell.
For example, Ms. Pennewell said, if Fannie Mae pledged to buy a bundle of mortgages for a certain price on a certain date, in the past the transaction would be valued at that agreed-upon price.
Under the new standard, she said, Fannie Mae had to value the transaction at the market value of the mortgages at the time of the purchase. If the market price of the mortgages rose in the interim, that had the effect of increasing their value on Fannie Mae's books, which is why the value of the mortgage portfolio increased, she said
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