So This Subprime Lender Walks Into an Audit... |
| Published: September 7, 2007, 1:36 am |
| Tags: high low finance, norris floyd, novastar, sub prime crisis |
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By FLOYD NORRIS Published: September 7, 2007 The auditor got cold feet, and the company may die.It would no doubt be interesting to hear a tape of conversations last week between the senior management of NovaStar Financial, a subprime mortgage lender, and its auditors at Deloitte & Touche. NovaStar, like many of its competitors, has seen its business model blow up this year. But in mid-July it got a lifesaving $48 million infusion of capital from two institutional investors, with a promise of $101 million more to come. Now Deloitte has effectively revoked its audit of NovaStar evidently without claiming that any number in the report was wrong and the investors do not have to put up the cash.Deloitte seems to have invoked a little-known auditing standard that says an auditor cannot allow a previously audited financial report to be cited by a company if there are subsequent events of such a nature that disclosure of them is required to keep the financial [ Full article ] |
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