The internal controls required of any TARP recipients have been identified and tested by the auditing engagement team. These auditors are not effectively testing the foreclosure management’s use of stale and inadequate title records and other stale date appraisals to ascertain the degree of impairment to the collateral.
The collateral underlying the bank’s troubled loan portfolio is NOT the banks portfolio and statements regarding the mortgage servicing or servicer’s roles are material violations of the SEC Rule 1122AB, not subject to the recovery but as mandated in this recovery. For example, the auditors identified Tier One Asset Classification offering no reference in the audit work papers to whether or how the auditors assessed the value of the collateral underlying individual loans evaluated for impairment, and the committee did not generate or review written documentation to support management’s assumptions. .
Given the complete lack of documentation, auditors allow for business as usual having little or insufficient evidence from which to conclude that the bank’s internal controls for valuation of collateral are effective.
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