[Author’s Name]
[Institution’s Name]
Essay on Analysis of Freddie Mac Accounting Scandals
Freddie Mac. The Company's principal activities are purchasing and financing of single-family and multi-family residential mortgages and the provision of mortgage-related services. The Company purchases mortgages from lenders and then pools and packages the mortgages into securities and markets those securities to the investors. The Company also guarantees principal and interests payments on mortgage-backed securities. The Company operates in Atlanta, Georgia, Chicago, Illinois, Dallas, Texas, New York and California. Interest income accounted for 95% of 2001 revenues; management and guarantee income, 4% and other income, 1%.
The details of the accounting at Freddie Mac offer a glimpse into the difficult issues facing executives confronted with complex reporting requirements and pressed to meet goals of smooth earnings growth. The restated financial statements show that the company did not simply understate net income consistently; it fluctuated sharply from quarter to quarter.
Freddie Mac stunned investors when it announced it would have to restate earnings, and again in June when it ousted its chief executive and other officers for allowing the accounting irregularities. An independent report said the company's chief operating officer, David Glenn, had altered pages in his diary before turning it over to investigators.
Glenn, who was fired, had agreed to pay a $125,000 civil penalty and to cooperate with a government investigation. The cumulative effect of the financial finagling and accounting errors was an understatement of earnings by $5 billion. In addition to an overstatement of $989 million in 2001, it understated profit by $4.33 billion in 2002, by $1.12 billion in 2000, and by $600 million in periods before 2000....
This essay has the followings:
Total words: 358
Total reference: 10
Total price: £ 9.95
Click here to Order this essay!
Get Professionally written Essays that are:
• Written According to your Exact Requirements
• 100% Original and Non-Plagiarized
• Written by Expert
UK Writers
• Delivered to you before your deadline
Amazingly Low Prices - £9.95/page
