In another blow for the reputation of Merrill Lynch and the tenure of departed chief executive John Thain, the bank has revealed an accounting flaw caused it to underestimate full-year 2008 losses by $500 million.
In another blow for the reputation of Merrill Lynch and the tenure of departed chief executive John Thain, the bank has revealed an accounting flaw caused it to underestimate full-year 2008 losses by $500 million.
In revised figures released in its annual report, Merrill said its full-year losses were $27.6 billion, not the $27.1 billion reported back in December. The original full-year loss, including a loss of $15.3 billion for the final quarter, shocked analysts at the time of its release.
Auditor Deloitte & Touche concluded that Merrill had “not maintained effective internal control over financial reporting” as of the end of 2008. The discrepancy involved incorrect valuation of certain swap derivatives used in hedging strategies between itself and its affiliates.
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