Auditing

Deloitte Quits as Radian’s Auditor

The filing of a quarterly financial report before the auditor had finished reviewing it may have led to the breakup.
Stephen TaubOctober 3, 2007

Deloitte & Touche has decided to stop serving as Radian Group’s independent accountant after the company files its third-quarter report, Radian announced.

The relationship was scheduled to end had Radian completed its merger with MGIC Investment Corp, but Radian and MGIC agreed on September 5 to terminate the proposed deal.

The mortgage insurer noted that Deloitte’s audit reports for each of the three years in the period ended December 31, 2006, contained no adverse opinions or disclaimers of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles.

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However, on August 9 the company filed its June 30, 2007 quarterly report before Deloitte had completed its review of the interim financial statements. As stated in the amended report, Deloitte needed to review additional documentation supporting the conclusion that an impairment charge relating to the company’s interest in Credit-Based Asset Servicing and Securitization LLC occurred after June 30, 2007.

Management discussed the events surrounding the filing of the second quarter financials with Deloitte and the chairman of the company’s Audit and Risk Committee on August 10, Radian noted. On August 14, the company filed a second amendment to the report stating that the matters related to the impairment had been resolved without changes or amendments to the interim financial statements included in the second quarter report.

“The company has authorized Deloitte to respond fully to the inquiries of any successor accountant concerning this matter or any other matter,” Radian stated in its regulatory filing.