Ocwen Financial discloses material weakness in internal control Ocwen Financial stated in a regulatory filing, "Management has concluded that the Company’s disclosure controls and procedures and internal controls over financial reporting were not effective as of December 31, 2013 solely due to a material weakness in internal control over financial reporting related to the accounting convention when applying the interest method in accounting for financing liabilities related to Rights to MSRs sold to HLSS. Specifically, our controls were not properly designed to calculate the appropriate allocation of cash payments between principal and interest in connection with the financing liability." Ocwen added, "We have corrected our application of the interest method in connection with the accounting for financing liabilities related to sales of Rights to MSRs to HLSS by eliminating the accounting convention as a result of the restatement. We are also in the process of implementing new controls related to the monitoring and oversight of valuations of Level 3 assets and liabilities and the level and timing of critical assumptions used in third-party valuations we use in our accounting processes and reporting. Management believes these initiatives will remediate the material weakness in internal control over financial reporting described above. We will test the ongoing operating effectiveness of the new controls in future periods."
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