Friday, March 20, 2015

My Letter to Deloitte & Touche LLP Regarding Gold Certificates Held by the Federal Reserve

The New York Federal Reserve Bank has just released its latest financial statements. It lists Deloitte & Touche LLP as their auditor. Via Deloitte's electronic web site form. I sent them the below query. I will publish any response from the firm.
I have noted that the New York Federal Reserve Bank of New York, in its recent financial statements, lists your firm as the bank’s independent auditor, and includes a letter from your firm which states in part:

“Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the FRB New York’s internal control over financial reporting based on our audits. We conducted our audits of the consolidated financial statements in accordance with auditing standards generally accepted in the United States of America and in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States) (the “PCAOB”) and we conducted our audit of internal control over financial reporting in accordance with attestation standards established by the American Institute of Certified Public Accountants and in accordance with the auditing standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement and whether effective internal control over financial reporting was maintained in all material respects. An audit of the consolidated financial statements involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. ”

I am curious as to the first line item listed on the New York Federal Reserve’s “Consolidate Statement of Condition”.  It lists gold certificates in the amount of $4.1 billion (valued at $42.2222 per ounce)

As I am sure you are aware, it is of major significance to the people of the United States that there is actually physical gold backing up these Treasury certificates.

Footnote b of the NY Fed statement begins:

“The Secretary of the Treasury is authorized to issue gold certificates to the Reserve Banks. Upon authorization, the Reserve Banks acquire gold certificates by crediting equivalent amounts in dollars to the account established for the Treasury. The gold certificates held by the Reserve Banks are required to be backed by the gold owned by the Treasury. “

I am curious with regard to your discussion as referenced above of your responsibility to insure the accuracy of the New York Fed statements what measures you took to verify that the certificates are backed up by physical gold, as stated by the New York Federal Reserve Bank.

Both the readers at and perhaps many others thorughout the nation would be interested in how you audit this first line item on the bank’s statement.

Thank you for your assistance in this matter.

Robert Wenzel is Editor & Publisher of and of Target Liberty. He is the author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics

1 comment:

  1. Ha, excellently worded questions!

    By not accurately auditing the gold reserves Deloitte can and should be implicated in the *possibly deception / cover up.

    Will you ever get a response … I think not