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Walter Investment says previous financial statements cannot be relied on

Walter Investment Management Corp.'s management has concluded that previously issued financial statements and information in its annual report for 2016 and in its quarterly filings for the last three quarters should no longer be relied upon.

The company disclosed in a filing that it became aware of an error in the calculation of the valuation allowance on the deferred tax asset balances in the original statements. The methodology Walter Investment employed essentially resulted in a duplication of the reversal of taxable temporary differences.

Adjustments to the valuation allowance on those balances are expected to be material and reduce the tax benefits the company recorded in on its comprehensive loss line. The adjustments are not, however, expected to impact reported net operating cash flows.

Walter Investment said it reassessed its internal controls and determined that it had a material weakness related to the review of the tax calculations associated with the valuation allowance. The company's audit committee and its management have spoken with the company's public accounting firm about the matter.