Monday, November 15, 2004

Sarbanes-Oxley Compliance: SunTrust Banks May Not Make Sarbanes-Oxley Deadline

Problems with how SunTrust Banks Inc. calculates loan-loss reserves will likely prevent the company from meeting Sarbanes-Oxley Act reporting requirements this year. Last week three SunTrust employees were fired in connection with accounting irregularities--deficiencies in the bank's method of determining loan-loss reserves--uncovered by an internal investigation. The bank restated its earnings upward for the first half of the year because of the discovered irregularities.

The investigation revealed "inadequate control procedures, insufficient documentation, and a failure to detect errors in our loan-loss calculations," SunTrust chairman and CEO Phillip Humann said in a conference call last week.

The three terminated employees, including the bank's chief credit officer, belonged to its credit-administration division. In addition, the bank's controller was reassigned to a position not related to financial reporting.

Sarbanes-Oxley Compliance: SunTrust Banks May Not Make Sarbanes-Oxley Deadline

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