The permanent accounting firm of ex-President Donald Trump calls ten years worth of financial statements of his company no longer reliable. It concerns the figures of the Trump Organization from the period 2011 to 2020. The office, Mazars USA, also severs ties with the company of the American former president because of “conflict of interest”.
The news came out Monday after a letter from the accountant to the Trump Organization was filed with the court. That letter states that, according to Mazars, “it is no longer appropriate to rely on the annual accounts.”
Mazars’ decision follows a civil investigation into the Trump Organization by New York State Attorney Letitia James. In January James announced that that investigation had uncovered several “misleading statements and omissions” in financial statements and tax returns.
Mazars decided to re-examine the financial statements and came to his conclusion based on James’ findings, “own research and information from internal and external sources”. Nevertheless, the office also reports that there are no major “discrepancies” in the figures.
In a statement, the Trump Organization said it views Mazar’s letter as confirmation that the firm’s work “conforms to all applicable accounting principles.”
Penthouse at Trump Tower
Trump is suspected of exaggerating the value of his assets in order to claim loans on attractive terms. For example, he is said to have shared incorrect information about the size of his penthouse in Trump Tower, and several hotels and golf clubs have been overvalued, thus The New York Times†
Mazars, the NYT writes, is now one of many companies that have severed its partnership with the Trump Organization. Several banks, insurers and law firms have done this before.
Prosecutor James again announced on Monday that she wants to question Trump under oath, as do his two adult children Ivanka and Donald Jr.
Read alsoTrump family business and accountant charged with tax fraud
James’ investigation is a civil matter: she cannot demand a prison sentence.
In addition, in Manhattan also an investigation into criminal prosecution of the Trump Organization and the chief financial officer, for fraud.
While Mazars believes the Trump Organization’s financial statements are no longer reliable, the accounting firm also states that there are “overall no material discrepancies.”
That is striking, thinks the Dutch professor of accountancy Marcel Pheijffer. ‘Subjects that are ‘material’ include matters that are taken into account in the decisions of, for example, financiers and investors.
Damage claims by financiers
The accountant provides assurance that the annual accounts and the figures are correct. If afterwards it turns out that it is not right, it often starts to rub,” he says. “Opposite the accountant who claims to have done his job well, there are, for example, financiers who say that they have suffered damage and that they want to recover that from the accountant.”
In the case of the Trump Organization, financiers may try to demonstrate “that they would not have provided funding to Trump if they had known his numbers were wrong.”
Examples in the Netherlands
In the Netherlands, too, it sometimes happens that the annual accounts are subsequently “declared worthless,” says Pheijffer. This happened, for example, at South African furniture store chain Steinhoff .
Vestia was about to collapse after a billion-dollar loss on its derivatives portfolio. Accountants KPMG and Deloitte claimed that they had done their job well, but were nevertheless convicted. In the Steinhoff case, a South African department store where there were accounting irregularities, Deloitte settled with shareholders for more than 70 million euros.