BofA bolsters compliance after $10.7 bln error

* BofA said errors were spread over three-year period

* Mistakes were immaterial to earnings – spokesman

CHARLOTTE, N.C., July 10 (BestGrowthStock) – Bank of America Corp
(BAC.N: ) is beefing up its internal accounting controls after it
incorrectly classified as much as $10.7 billion in short-term
lending and repurchase deals for mortgage securities as sales,
according to a letter filed on Friday with U.S. securities

The Charlotte, N.C.-based lender said the transactions —
spread over a three-year period — were immaterial to Bank of
America’s earnings in a May 13 letter to the U.S. Securities
and Exchange Commission, which was publicly filed on Friday.

The error was first disclosed in the bank’s first quarter
2010 report, which noted the bank incorrectly accounted for
some mortgage-backed securities as sales, rather than
repurchase or short-term lending deals.

The first such error occurred on March 31, 2007, totaling
$4.5 billion in securities. The largest misclassification was
$10.7 billion in securities on Sept. 30, 2008.

“The transactions did not have a material impact on the
bank’s earnings or balance sheet,” said company spokesman Jerry

If the deals were properly accounted for, Bank of America’s
Tier 1 capital ratio — a key metric monitored by bank
regulators — would have declined 0.01 percent on Sept 30,
2008, when the largest such error existed.

Bank of America has since beefed up its internal accounting
procedures to prevent the error from recurring and the bank has
not found similar errors after an internal review, according to
the bank’s letter to the SEC.

(Reporting by Joe Rauch, editing by Vicki Allen)

BofA bolsters compliance after $10.7 bln error