When it comes to bank audits--at banks small and large--the bean-counters are taking an even more conservative tack than usual, which has forced more than a few to restate earnings. The Los Angeles Business Journal notes the case of California United, where executives wanted to take a $80,000 loss on some "toxic" assets but were ultimately forced to take a $1.4 million write-down. 

Right now, banks aren't in a strong position to argue, and auditors are feeling some heat. The issue may get even more complex given the recent mark-to-market guidance that was issued by the FASB. We'll see lots of haggling over how to apply them, as the exact implementation rules are still uncertain. There's still a big gray zone, which could easily translate into confrontation. Banks may be motivated to boost their tier one capital of course, but that doesn't mean the auditors will let them.   

For more:
- here's the Los Angeles Business Journal article

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