Essay About New Century Financial Corporation And New Century’S Auditors

Index/BusinessNew Century Financial CorporationNew Century Financial Corporation006055550 Xuewei LiNew Century Financial Corporation is one of the largest subprime loan originators in the US. Subprime loan means loans designed for subprime borrowers. In my opinion, the quality of oversight provided by NCFC’s board is do not have good quality. And the bad oversight quality should be blamed for the accounting failures for the company. As Richard Zona suspected, management constructed barriers to implementing board decisions instead of determining the best way to implement them. Board placed too much faith of action in management. New Century’s auditors should also be blamed for failing to question important assumptions and departures from prescribed accounting methods. KPMG is questioned by its poor professional standards and lack of experience of the engagement team in the mortgage banking industry. The problems induced the failures at NC had occurred despite the enhanced governance, audit and disclosure requirements imposed by the Sarbanes-Oxley Act. In my opinion, it is because the identified problems can not be follow-up or identified on time. Also a lack of necessary communication, timely follow up and mutual supervision between senior managers, board of directors and audit committee induced advertent oversight. The incorporation between different departments leads to the ineffective internal control.

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