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October 11, 2007

Comments

Jed

It will be interesting to see how many of the public builders receive year-end audit reports with "going concern" qualifications. Quite a few, I would guess. I would imagine that E&Y's executive office will require in-depth reviews of public homebuilder financial statements by experienced SEC partners this year, to make sure the audits are done right, that impairment charges are adequate, etc. E&Y "owns" the industry, so it is not likely that the firm would allow a bunch of flawed audits to go out the door and put the firm at risk.

Jed

It will be interesting to see how many of the public builders receive year-end audit reports with "going concern" qualifications. Quite a few, I would guess. I would imagine that E&Y's executive office will require in-depth reviews of public homebuilder financial statements by experienced SEC partners this year, to make sure the audits are done right, that impairment charges are adequate, etc. E&Y "owns" the industry, so it is not likely that the firm would allow a bunch of flawed audits to go out the door and put the firm at risk.

Jed

Sorry about the double post. Great series, by the way.

Reggie

It would make sense that this is an opportunity for other audit firms to attempt to move in and expand their presence. I noticed that Fitch has gotten much more aggressive in their ratings.

I know nobody in the industry wants to hear it, but as the "CFO" stated in the blog, there is a conflict of interest in having the company being audited compensate the auditor. There is a similar conflict with the ratings agencies as well. I know a couple of partners in the auditing firms and they are credible, honest, stand up guys - but the compensation system leads to potential and actual conflicts of interest.

homes for sale newport coast

A lie is when I listen to a conference call of a major homebuilder, the executives tell a story to the usual cast of dimwitted characters (analysts) and a strategic picture is painted.

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