Thrift Firm's Financial Data Partly Qualified --- Financial Corp. of America's New Auditor Questions Status as Going Concern
IRVINE, Calif. -- Financial Corp. of America said that its new auditor questioned the thrift holding company's future as a going concern and disclosed that the Securities and Exchange Commission is planning an investigation of the concern's previous practices in establishing loan-loss reserves.</br></br>The disclosures came as Financial Corp. announced an expected $512.1 million fourth-quarter loss, one of the largest losses ever posted by a financial concern in the U.S.</br></br>Financial Corp.'s new auditor, Peat, Marwick, Mitchell & Co., issued a qualified opinion on the company's balance sheet, saying that Financial Corp.'s ability to continue as a going concern depends on "the company achieving a profitable level of operations . . . market interest rates and the continuing forbearance of the federal and California state regulatory authorities."</br></br>Peat Marwick also declined to give an opinion on the company's income statement, changes in stockholders' equity, changes in financial position for 1984, and on whether accounting principles in 1984 financial statements were consistent with those of the prior years.</br></br>Meanwhile, the company's 10K statement said the SEC plans a probe of loan-loss reserves. But the statement said the commission's staff won't recommend any enforcement action from its previous inquiry on accounting for transactions involving the purchase and immediate resale of properties by the company's American Savings & Loan Associaton unit in 1980 and 1981.