Tuesday, November 16, 2004

Accounting problem at SunTrust could delay Sarbanes-Oxley filing

An internal financial audit at SunTrust Banks Inc. has confirmed an accounting problem with its loan loss reserves that could prevent the bank from completing its Sarbanes-Oxley Act reporting requirements by a Dec. 31 deadline.
In an announcement last Wednesday, Atlanta-based SunTrust said that its internal audit found "numerous errors in the loan loss allowance calculations for the first and second quarters, including data, model and formulaic errors," that were not immediately investigated and corrected. Also found were problems with the implementation of a new accounting allowance framework in the first quarter, which resulted in inadequate internal control procedures, insufficient validation and testing, and a failure to detect errors in the allowance calculation.

The bank has since had to restate its first- and second-quarter 2004 financial results because of the problems, according to SunTrust. Three employees in the bank's credit administration division, including its chief credit officer, were fired in connection with the problems, which weren't properly investigated and pursued by the Allowance Committee, according to the bank.

Accounting problem at SunTrust could delay Sarbanes-Oxley filing

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