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Auditors up scrutiny of write-downs, firm survival
Reuters
February 22, 2008
U.S. auditors have grown more skeptical about hard-to-value financial assets in the last few months and are now sharpening their evaluations of whether troubled firms will be able to stay afloat, the chief executive of one of the largest public company auditing firms has told Reuters.
Auditors are "very sensitive to companies that try to play games with different types of securities and are looking closely at what is impaired -- everything from hard assets and real estate to complicated derivatives and financial securities," Ed Nusbaum, chief executive of Grant Thornton LLP and a member of the CAQ's governing board, said in an interview.
U.S. banks have written off ever larger amounts in the credit crisis triggered last year by widespread defaults on mortgages extended to subprime borrowers. But as the liquidity crunch has spread, auditors are looking at a wider array of industries for possible trouble, Nusbaum told reporter Emily Chasan. "We tell our auditors to look at every company, not just the subprime mortgage companies and homebuilders," Nusbaum explained. "It is an extraordinarily broad impact. Companies have entered into so many different types of transactions and become very sophisticated in trying to hedge their risks ... you've got to look at every company out there."
