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KPMG: CFTC Understated Liabilities by 75 Percent of Annual Budget

By:
Chris Gaetano
Published Date:
Jan 20, 2016
US-CFTC-SealIn a classic case of the cobbler's son having no shoes, the Commodity Futures Trading Commission (CFTC), a major financial regulator, was found to have understated its liabilities by hundreds of millions of dollars, throwing almost a decade's worth of audit opinions into question, according to Reuters. Specifically, the firm became aware that the CFTC had understated its liabilities by $194 million in 2014 and $212 million in 2015. Reuters pointed out that the CFTC's annual budget is $250 million. The issue is how buildings leased by the federal agency were accounted for: renting space in Washington D.C., Chicago, New York and Kansas City, the regulator is said to have only accounted for that year's worth of rent, versus the full cost of the lease over time as it should have. Consequently, the CFTC, at KPMG's request, removed its 2005–2008 and 2010–2014 audit opinions from its website. 
 
The CFTC disputed the opinion, and added that it views the matter as a technical accounting issue that doesn't reflect the agency's ability to meet its financial obligations. IT IS awaiting results from an official government auditor.