Freddie Delays Earnings Restatement

Freddie Mac has pushed back the release date for its restated financial results to November and announced that the cumulative increase in retained earnings is expected to be $4.5 billion or more.However, the government-sponsored enterprise cautioned that neither the restatement nor the re-audit process is complete, and therefore the cumulative effect could differ from that estimate. "We regret the need to extend our restatement deadline of Sept. 30, but our number one priority has been -- and continues to be -- getting our financial statements right," said Martin F. Baumann, Freddie Mac's executive vice president for finance and chief financial officer. He said the delay "does not result from new accounting errors," but from a need for computer system modifications, additional data processing, and validation of the results. The need for the additional work was uncovered during the final review of asset transfers and securitizations, Mr. Baumann said. Freddie Mac said all the accounting corrections expected to be addressed in the restatement still fall in the five categories identified in its June 25 announcement on the subject: security classification; accounting for derivative instruments; asset transfers and securitizations; valuation of financial instruments; and all other corrections.