It has been reported that New Century Financial Corp, a bankruptcy mortgage lender, has used invalid accounting practices when starting loans that could be considered risky.

Michael J. Missal has found that the company was involved in at least seven faulty account incidents, which later lead to their reporting incorrect financial data to Wall Street for the fiscal year of 2005 and most of 2006. He has also seen that the company did not follow a good procedure in managing the risks incurred, by their often lending to borrowers who did not have the ability to afford the loans in question. This helped lead to their eventual downfall.

In the report made by Missal, it says that, "New Century had a brazen obsession with increasing loan originations, without due regard to the risks associated with that business strategy,...The increasingly risky nature of New Century's loan originations created a ticking time bomb that detonated in 2007." His report also states that the accounting firm for the company, KPMG LLC, assisted in some of the improper practices. In a statement made to The Associated Press, Missal said that, "As an independent auditor they're supposed to look very skeptically at any client, and here they became advocates for the client and in fact even suggested some improper accounting treatment that ultimately started New Century down the road it's taken,".

All of the report´s discoveries could help the trustee assigned to liquidate New Century to sue the company´s executives and KPMG to help pay the lenders creditors.

A representative for KPMG, Dan Ginsburg, says that their accounting firm disagrees with any conclusions made on negligence on the part of his company and that, "We believe that an objective review of the facts and circumstances will affirm our position,".