Consequences Of Audit Failure In Bank Of America Response

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Date: TIME \@ "MMMM d, yyyy" April 10, 2017
Re: consequences of audit failure in Bank of America
As it is in the modern society, there is much of external audit that is promoted due to the advancement in technology that has to enable the stakeholders to be able to manage, control and also prevent risks. There is also proved steady stream of failure that shows that technology is also capable of causing failure. The Bank of America had made a very significant error in a method it calculates important measures of its financial health. The mistake had gone more years without being detected where the bank had reported $4 billion more of the capital it owns. After reporting the error to the Federal Reserve, they were required by the regulator to suspend the shares buyback that was in progress together with the increase quarterly dividends. The error also will stir the debate as to whether these big banks in the land are too big and complicated to manage (DeNisi, et al., 2014). The other issue that was brought about by the error is that it was going to raise questions about the quality of the accounting employees by the Bank of America; since it is the task of the accounting workforce to present the quarterly financial statement of the banking operations to both the public and the regulators. Also, the audit board and their external auditing firm also allowed the error to pass through and stay for a long time.
Since the financial year in 2008, the government had placed its focus on financial systems to take part in increasing the capital through absorbing their loss and help the banks through the problems that they faced. Fed did conduct a stress test to the big bank every year so as to assess if those banks had enough capital to withstand the shock. The back of America passed this test in the month of March giving it permission to increase its shareholder's payouts. It is through that they were approved for the $4 billion share repurchase plan together with the 4-cent increase to their quarterly dividends. The recent test shows that there is a problem with the financial projections which is not simple to resolve.
The Bank of America must be able to address the error in its regulatory capital calculations as part of the second submission and take the review of its regulatory capital s as to recheck on the capital regulation reports so as to make sure that there are no future errors. The final thing was that in 2008 and 2009, the market value of the bonds that were issued by big banks fell that led to increasing their reported profits. The following year, the bank appeared to be in a better shape that made the market shares of their bonds to raise that was accompanied by the reduction in reported profits.
The bank regulator was able to comprehend that and understood it whichever the accounting rationale used although there was no sense to increase or lower the profits since there was changed the credit standing. The Bank of America was expected to be able to pay all its liabilities...