The Irvine, Calif., subprime lender New Century Financial Corp. said that it has found more accounting errors but will not bother to correct them or the errors it discovered previously.
New Century, which is liquidating under Chapter 11 of the federal Bankruptcy Code, said its audit committee found errors in the company's 2005 financial statements that resulted in "a material overstatement" of its pretax earnings.
The board has concluded that the 2005 statements "should no longer be relied upon," New Century said in a filing Thursday with the Securities and Exchange Commission.
The ability to investigate the errors further "is constrained," because of the Chapter 11 proceedings, New Century said, so it does not expect to complete a restatement of its 2005 financial statements or its interim 2006 financial statements.
In a February filing with the SEC, New Century had said its previously filed interim financial statements for the first three quarters of last year had to be restated to correct errors in its accounting and financial reporting of loan repurchase losses.
At that time New Century's audit committee started an independent investigation that was subsequently expanded to include issues related to the valuation of residual interests.
On Thursday, New Century said the errors related to 2005 results also involved the accounting and reporting of loan repurchase losses and the valuation of certain residual interests in securitizations.
