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Former SEC Chief Accountant Blames FASB for Meltdown

He credits auditors and financial statement preparers for successfully fighting fraud.

David McCann, CFO.com | US
March 4, 2009

SPE games come in part via bank management

Lynn Turner forgets who are the abusers who pressure FASB in one way or another and for what are key bread/butter matters such as structured finance and financial 'engineering'. Bank management goes to Norwalk and pressures the Board to have the power for the SPEs to remain unconsolidated, while worthless, marginal and extremely toxic financial engineering flows and resides in those Vehicles. All players know the burndown when these vehicles will come on balance sheet, but during the time while playing, banks enjoyed record earnings. Meawnhile FASB isnt/hasn't been completely immune from the politics or even with board members have come from wallstreet and/or when people like Bob Ruben leave Goldman to work at Treasury and push the Commodity Futures Modernization act 2000 obtaining 'legal' designation for bogus, crippling, deceitful financial contigencies by the name of OTC derivatives and Exotic contracts FASB is called to establish a framework to value, when these derivatives' contracts former/original state, were one-off bilateral enterprise contracts with a single counter-party and not meant to exchange trade or clear. Would your counterparty agreements for your auto insurance or your kitchen appliance warranties be able or should they exchange trade? But because the power of bank management has had undue leverage in Congress, against FDIC, FASB and the voters, the Fed, the OCC, the OTS, and their charges have gotten favor from FASB from consolidation of these structured vehicles. Mr. Turner may have forgotten this, or he's looking to curry favor for his next consulting assignment.

Posted by Andrea Psoras | December 07, 2009 09:47 am

SPE games come in part via bank management

Lynn Turner forgets who are the abusers who pressure FASB in one way or another and for what are key bread/butter matters such as structured finance and financial 'engineering'. Bank management goes to Norwalk and pressures the Board to have the power for the SPEs to remain unconsolidated, while worthless, marginal and extremely toxic financial engineering flows and resides in those Vehicles. All players know the burndown when these vehicles will come on balance sheet, but during the time while playing, banks enjoyed record earnings. Meawnhile FASB isnt/hasn't been completely immune from the politics or even with board members have come from wallstreet and/or when people like Bob Ruben leave Goldman to work at Treasury and push the Commodity Futures Modernization act 2000 obtaining 'legal' designation for bogus, crippling, deceitful financial contigencies by the name of OTC derivatives and Exotic contracts FASB is called to establish a framework to value, when these derivatives' contracts former/original state, were one-off bilateral enterprise contracts with a single counter-party and not meant to exchange trade or clear. Would your counterparty agreements for your auto insurance or your kitchen appliance warranties be able or should they exchange trade? But because the power of bank management has had undue leverage in Congress, against FDIC, FASB and the voters, the Fed, the OCC, the OTS, and their charges have gotten favor from FASB from consolidation of these structured vehicles. Mr. Turner may have forgotten this, or he's looking to curry favor for his next consulting assignment.

Posted by Andrea Psoras | December 07, 2009 09:47 am

Turner is a blowheart

I have had the unfortunate luck of getting to spend time with Lynn Turner and I can tell you one thing; This man is an idiot and the accounting world has passed him by. He talks to talk and if I had to rate him from 1 - 10 it would be a 1. Crawl back in your hole Lynn and let the the people who have a clue address the big boy issues.

Posted by Lynda Turner | April 05, 2009 01:55 am

Conservatism

I am not an accountant. I run heavy equipment (construction). I took accounting in HS. It seems blatantly obvious to me that greed has run rampant within this country in the past 15 years. How can you objectively value anything when those measurements used to do so have lost meaning. I am studying the accounting field again because I enjoy the conciseness, control and science of measuring value. I have just learned about the mark to market idea and find it borne out of pure greed. What ever happened to pure book value? Something to base a sound decision on? It all makes sense though. These companies that are falling off the cliff are actually reaping what they sow. It has train wrecked our economy. Shame on those responsible for allowing the basic tenets of accountancy to get to this point. Is it to late?? By the way. What sort of chance does a 47 y/o construction worker have of switching into accounting? I would love to audit but need school? RTFEE1961@yahoo.com

Posted by Richard Fee | March 12, 2009 11:50 am

WHERES THE NOTE? 60 MINUTES BROADCASTS

STOP THE GUESSING AND YOU STOP THE MADNESS. CLASS SUITORS NEED TO LOOK TO THE NUMBERS AS NUMBERS DONT LIE. FORGET THE NOTE CHALLENGE! WHERES THE NOTE? 60 MINUTE'S BROADCASTS SPECIALS ABOUT THE LOST NOTE. JUDGE BUFORD OPINES "NO NOTE - NO LOAN". WHAT'S THE ANSWER . . . ACCOUNTING! GAAP, FASB AND THE P&L OR BALANCE SHEET (THINK ABOUT IT). THE PROBLEM IS NOT REGULATORY NEGLIGENCE NOR FSB'S ABILITY TO ADD. MY POINT IS A HOLDER IN DUE COURSE IS UP FOR GRABS AND ITS CLEAR TO US HOW TO EXPEDITE THE LAWS SUITS. CDO STRUCTURE V. PASS THRU'S INVESTORS. EACH MUST LOOK TO THE COMBINATIONS AND THEIR REPORTING METHODS . . .SUPOENA THE BOOKS. BASIS ACCOUNTING BEGINS WITH AN ENTRY AND CULMINATES WITH A GAIN (OR LOSS ON SALE) THE FSB . . .IM SORRY TO SAY HAS GOT PROBLEMS!THANKS CFO MSOLIMAN@BORROWERHOTLINE.COM

Posted by Maher Soliman | March 08, 2009 02:57 pm

Where was Lynn Turner?

I was just wondering if anyone has asked Lynn Turner about his reponsiblity with regard to Bernard Madoff. Harry Markopolos, a former securities industry executive and fraud investigator, brought his allegations to the SEC about improprieties in Madoff?s business starting in 2000. Who do you think was the SEC's Chief Accountant at that time? In fact, he was the SEC Chief Accountant for several years during the time the Madoff fraud was taking place. I guess the best defense is a good offense.

Posted by Art Berkowitz | March 05, 2009 08:27 pm

Mark-to-market excuses accountants

When FASB adopted mark-to-market accountng, FASB permitted the financial statements to enter the realm of speculative asset valuation. The accountng industry was willing and supportive because the CPAs no longer were responsible pinning asset values. Asset valuation was delegated to the whims of the fickle marketplace. Mark-to-market accounting is the cause of the financial the crisis as it was in the lead-up to the Great Depression. Mark-to-market accounting rewards smart buying because if you buy low and the market value increases, you see your asset increase without requiring realization or conversion. One didn't have to sell nor is one forced to covert in order to inflate the asset value. Lower of cost or market keeps financial statements real. IFRS should be rejected based on the subjective nature of its valuations. Conservatism is not dead.

Posted by Joe Jefferis | March 05, 2009 02:44 pm

Financial Meltdown, FASB and CPA Firms!!!

While the FASB deserves its share of the blame for the meltdown of the American and world financial system, former SEC Accountant, Lynn Turner, attempts to absolve the Accoounting profession, especially outside auditors, is way off base. Unless I'm missing something, certified public accountants are charged with conducting audits in a manner that protects the interests of investors, regulators, and others stakeholders. Didn't CPA firms issue unqualified opinions on the financial statements of financial institutions, namely commercial and investment banks, mortgage companies, etc.? And aren't these the same companies that had balance sheets, overflowing with derivatives and other exotic financial instruments, that everyone is now claiming that no one, even the auditors, really understood? If the aforementioned is true, and it is, then the supposed guardians of hte public interest, Big Six CPA firms, have not only failed, but they failed big, big time!!! If outside auditors did not understand the derivatives on the balance sheets of the companies being audited, how could they assess value? And if they could not assess value, why didn't they follow auditing standards and issue qualified opinions, alerting the investing public and regulators to a serious and growing problem, early enough to do something about it? That an accountant with the stature of Lynn Turner does not understand the above, and seeks to defend the indefensible, does not bode well for the role of outside auditors in reviewing and issuing opinions on the financial statements of financial companies, in the future. Something is not only very wrong with the FASB and accounting standards, but it appears that there is serious problem with auditing standards too!!! PCAOB, please beware. The evidence is staring you in the fact. The time to act is now!!!

Posted by Larry CIA | March 05, 2009 12:18 pm

You're kidding!

Has anyone heard of Madoff or Stanford? Years and years and no trades? Billions and billions and around the world? Probably immaterial!

Posted by Admin Contact | March 05, 2009 11:17 am

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