19 Jan Debtor Audits Stopped
The U.S. Trustee has suspended auditing debtors filing bankruptcy for now. Congress did not fund the audits in the 2008 appropriation. Alternate funding is being sought and audits will resume when funding is found, the Executive Office of the U.S. Trustee reports.
Debtor advocates testified before Congress October 2, 2007, that the audits have found precious little and were abusive to debtors due to overbearing auditors and erroneous reports of material misstatement being issued. My colleague in the Bankruptcy Law Network, Peter Orville, blogged on the topic recently, “What Have the Audits Found?”
Here is the statement on the U.S. Trustee website:
As mandated in Section 603(a) of Public Law 109-8, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), the United States Trustee Program (USTP) established procedures for independent audit firms to audit petitions, schedules, and other information in consumer bankruptcy cases filed on or after October 20, 2006. Pursuant to 28 U.S.C. 586(f), the USTP contracted with independent accounting firms to perform audits in cases designated by the USTP.
The FY 2008 Consolidated Appropriations Act, Public Law 110-161, provided no funding for debtor audits. As a result, the USTP has suspended its designation of cases subject to audit and has notified the independent accounting firms performing the audits. The Program is pursuing alternative sources of funding to permit it to resume the designation of cases subject to audit and, if successful, intends to reinstate the audits.
Pursuant to Section 603(a) of BAPCPA and 28 U.S.C. 586(a)(6), in the spring, the USTP will make public information concerning the aggregate results of the debtor audits performed during fiscal year 2007.
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