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BullBear
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Who was auditing Dexia?

October 12th, 2011, 8:35 am

Dexia statement:"2Q11 pre-tax income marked by EUR -4,193 m one off items mainly related to: Acceleration of asset disposals announced on May 27th2011, leading to losses on assets sold and to the reclassification of assets to the IFRS 5 category of ?non current assets and disposal groups held for sale?Participation in the IIF* Greece assistance programme leading to impairments on Greek government bonds at a 21% loss rate; EUR 1.8 bn of bonds (nominal value) falling within the scope"It looks like Dexia, under the allowance of its Regulator, Risk Managers and Auditors, wasn't taking MTM losses into consideration in their financial disclosures to investors neither was Dexia taking market values into consideration regarding their capital ratios requirements. Dexia's Board, auditors and employees ended up disclosing a one-time bullet loss (just last quarter) and leaving the bill to creditors or taxpayers... So... you pile up your mess during 2 or 3 years and hide that information, you keep earning nice wages and bonuses, and in the quarter immediately preceding bankruptcy you recognize all your losses accumulated during the last years.
Last edited by BullBear on October 11th, 2011, 10:00 pm, edited 1 time in total.
 
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SierpinskyJanitor
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Who was auditing Dexia?

October 12th, 2011, 1:14 pm

firmwide collusion it seems.once again.
 
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Fermion
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Who was auditing Dexia?

October 13th, 2011, 5:37 am

QuoteOriginally posted by: BullBearDexia statement:"2Q11 pre-tax income marked by EUR -4,193 m one off items mainly related to: Acceleration of asset disposals announced on May 27th2011, leading to losses on assets sold and to the reclassification of assets to the IFRS 5 category of ?non current assets and disposal groups held for sale?Participation in the IIF* Greece assistance programme leading to impairments on Greek government bonds at a 21% loss rate; EUR 1.8 bn of bonds (nominal value) falling within the scope"It looks like Dexia, under the allowance of its Regulator, Risk Managers and Auditors, wasn't taking MTM losses into consideration in their financial disclosures to investors neither was Dexia taking market values into consideration regarding their capital ratios requirements. Dexia's Board, auditors and employees ended up disclosing a one-time bullet loss (just last quarter) and leaving the bill to creditors or taxpayers... So... you pile up your mess during 2 or 3 years and hide that information, you keep earning nice wages and bonuses, and in the quarter immediately preceding bankruptcy you recognize all your losses accumulated during the last years.That's why it is so important to enforce "mark-to-market" accounting rules for all tradeable assets. And if there is no market, then the market value is nil. There's nothing to stop banks from also specifying their model valuations as long as they don't substitute them for "mark-to-market".However, what we have seen in the US since 2008 has actually made matters worse. At the end of March 2009 Congress announced new rules, after extensive lobbying by the banks, to facilitate more fraudulent accounting not less. This was immediately followed (surprise, surprise!) by a new stock market bubble.
 
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BullBear
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Who was auditing Dexia?

October 13th, 2011, 10:12 am

QuoteOriginally posted by: FermionQuoteOriginally posted by: BullBearDexia statement:"2Q11 pre-tax income marked by EUR -4,193 m one off items mainly related to: Acceleration of asset disposals announced on May 27th2011, leading to losses on assets sold and to the reclassification of assets to the IFRS 5 category of ?non current assets and disposal groups held for sale?Participation in the IIF* Greece assistance programme leading to impairments on Greek government bonds at a 21% loss rate; EUR 1.8 bn of bonds (nominal value) falling within the scope"It looks like Dexia, under the allowance of its Regulator, Risk Managers and Auditors, wasn't taking MTM losses into consideration in their financial disclosures to investors neither was Dexia taking market values into consideration regarding their capital ratios requirements. Dexia's Board, auditors and employees ended up disclosing a one-time bullet loss (just last quarter) and leaving the bill to creditors or taxpayers... So... you pile up your mess during 2 or 3 years and hide that information, you keep earning nice wages and bonuses, and in the quarter immediately preceding bankruptcy you recognize all your losses accumulated during the last years.That's why it is so important to enforce "mark-to-market" accounting rules for all tradeable assets. And if there is no market, then the market value is nil. There's nothing to stop banks from also specifying their model valuations as long as they don't substitute them for "mark-to-market".However, what we have seen in the US since 2008 has actually made matters worse. At the end of March 2009 Congress announced new rules, after extensive lobbying by the banks, to facilitate more fraudulent accounting not less. This was immediately followed (surprise, surprise!) by a new stock market bubble.I don't agree with changes to MTM rules. It's a fraud. I can only defend a short-term suspension due to massive panic like in 2008. The problem is that the lobbies take advantage of exceptions to introduce long-term rules.Anyway, those rules can be terminated in court since they do not follow the general accepted principles of Accounting. Congress powers are not superior to the Supreme Court powers when the laws printed by Congress violate the principles, the moral and the philosophy of the law. Those guys have no respect for Prudence, Transparency, and symmetric disclosure to all stakeholders. Any Auditing firm that accept those rules knows that they're violating the general accepted principles of Accounting and hence should demand changes to the accounting of the firm otherwise they'll be committing fraudulent accounting.There's also an international accounting standard (IFRS 32) that demands all assets to be marked to market or marked to model and disclosed in an Annex but Bankers and Auditors seem to not care about that rule. So, Dexia's Board, their risk managers, internal & external Auditors, and their regulators are also
Last edited by BullBear on October 12th, 2011, 10:00 pm, edited 1 time in total.
 
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Gmike2000
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Who was auditing Dexia?

October 18th, 2011, 4:37 am

This is not surprising at all. It happened before in 2008. The next question is why the Belgian government guarantees for Dexia do not feed into that country's debt to GDP ratio (should increase by almost 15%). The German bank rescues increased German debt to GDP by almost 10%. I tell you why. Because this small country cannot afford it, while Germany could. It would hammer the final nail into the Eurozone's coffin. People would realize Belgium is the new Greece. To prevent this, there is collusion and corruption up to the highest EU levels.
 
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Anthis
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Who was auditing Dexia?

October 18th, 2011, 6:32 pm

QuoteOriginally posted by: Gmike2000This is not surprising at all. It happened before in 2008. The next question is why the Belgian government guarantees for Dexia do not feed into that country's debt to GDP ratio (should increase by almost 15%). The German bank rescues increased German debt to GDP by almost 10%. I tell you why. Because this small country cannot afford it, while Germany could. It would hammer the final nail into the Eurozone's coffin. People would realize Belgium is the new Greece. To prevent this, there is collusion and corruption up to the highest EU levels.A guarantee is a contingent liability. When it will be triggered it must become a government debt, but not before. Similar story happened over here, they inflated debt and deficit by adding up to central government debt and deficit the ones of a number of public utilities and enterprises, albeit this violates the eurostat rule of 50%, more than half of entities revenues must be originated from government subsidies. An inflated deficit/debt, can be deflated easier...
 
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TheNaif
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Who was auditing Dexia?

November 7th, 2011, 2:22 pm

Bernie Madoff
 
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Gmike2000
Posts: 801
Joined: September 25th, 2003, 9:49 pm

Who was auditing Dexia?

November 8th, 2011, 9:26 pm

QuoteOriginally posted by: AnthisQuoteOriginally posted by: Gmike2000This is not surprising at all. It happened before in 2008. The next question is why the Belgian government guarantees for Dexia do not feed into that country's debt to GDP ratio (should increase by almost 15%). The German bank rescues increased German debt to GDP by almost 10%. I tell you why. Because this small country cannot afford it, while Germany could. It would hammer the final nail into the Eurozone's coffin. People would realize Belgium is the new Greece. To prevent this, there is collusion and corruption up to the highest EU levels.A guarantee is a contingent liability. When it will be triggered it must become a government debt, but not before. Similar story happened over here, they inflated debt and deficit by adding up to central government debt and deficit the ones of a number of public utilities and enterprises, albeit this violates the eurostat rule of 50%, more than half of entities revenues must be originated from government subsidies. An inflated deficit/debt, can be deflated easier...5yr OLOs hitting 280bps versus bunds a few days ago. All accounting trickery set aside...the country is doomed unless they implement austerity and cut down that silly illusion of a social system. They can sell Wallonia to France, that might help.
 
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Gmike2000
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Who was auditing Dexia?

November 15th, 2011, 2:47 pm

Belgium The Next GreeceBRUSSELS - Belgian EU commissioner Karel De Gucht has warned that his country could be in line to suffer a Greek-and-Italian-type loss of market confidence if it does not quickly form a new government.Ooops!
 
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Gmike2000
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Who was auditing Dexia?

November 15th, 2011, 2:47 pm

Last edited by Gmike2000 on November 14th, 2011, 11:00 pm, edited 1 time in total.
 
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hamster
Posts: 216
Joined: October 12th, 2008, 3:51 pm

Who was auditing Dexia?

November 17th, 2011, 7:13 pm

QuoteOriginally posted by: BullBearDexia statement:It looks like Dexia, under the allowance of its Regulator, Risk Managers and Auditors, wasn't taking MTM losses into consideration in their financial disclosures to investors neither was Dexia taking market values into consideration regarding their capital ratios requirements. Everybody who claims being capable to understand banks' financial statements step forward.With the emergence of IFRS/IAS and its continuous extensions it became almost impossible to compare financial statements (even risk management reports to supervisors are superficial jokes of information). In particular everything what have something to do with financial assets and liabilities. That was worsen with changing IFRS/IAS 39 rules to avoid getting GFC worse.you mentioned external auditors. Are you aware that KMPG, PWC, Deloitte and so forth are those who are designing, changing and being in control of IFRS/IAS rules? And that the same external auditor firms have to negotiate their payments with the firms they are auditing? That is a fraudulent business relationship by nature. - Auditor: Oh you dont comply with current account rules...- Client: Dont look at this (=dont do your job) or find a "solution" (=change accounting rules)If you want to have a balance-sheet with a possibility to comprehend it, then buy a CDO and not banks' debt or stocks or whatever. - A CDO delivers usually monthly reports - A bank maybe a quarterly report- The "accounting rules" of a CDO will not change (fixed in the prospectus) - Banks' accounting rules are changing all the time (on own discretion and by auditors globally)- You can usually "see" all position of a CDO's credit portfolio (including hedge positions) - Banks' assets and liabilities are black-boxes
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