Financial Education

Securities regulations require the company’s auditors to provide a report stating whether investors can rely on the information presented. Such reports can take several forms:

• Unqualified opinion
• Qualified opinion
• Adverse opinion
• Disclaimer of opinion

An example of a qualified opinion is available from the auditors report for DAIMLERCHRYSLER AUTO TRUST 2005A. (Note: this is not DaimlerChrysler the company but a separate security backed by auto loans the company made to consumers.) In this report, the auditors say:

Our examination disclosed the following material noncompliance with minimum servicing standard II.1 as set forth in USAP. As explained in the Management Assertion, minimum servicing standard II.1 requires timely remittances of cash collections to the trusts. The Company’s daily remittances are to include an estimate related to interest collections, which is calculated at the beginning of each month and allocated to each remittance during the month. The calculation and allocation of estimated interest collections related to the daily remittances for January 2005 was not performed and daily interest was not remitted during the month, but was calculated and remitted in February through December.

We do not express an opinion or any other form of assurance on management’s statement referring to the accuracy of the monthly settlements or the correctness of the remittance of actual interest collections on the Distribution Date for the affected month.

In our opinion, except for the material noncompliance described in the third paragraph, DaimlerChrysler Financial Services Americas LLC has complied, in all material respects, with the aforementioned applicable minimum servicing standards for the year ended December 31, 2005.

Because of the qualifier, these statements are often called “except for” statements. Investors should make sure they understand why the auditors expressed the particular reservations before relying on the information in the report.

For more information, see all articles on: Financial Statement Analysis, Fundamental Analysis, Securities Regulation

See also:

Analyzing the Auditor’s Statement: Adverse Opinion

Analyzing the Auditor’s Statement: An Unqualified Opinion

Analyzing the Auditor’s Statement: The Going Concern Clause

Analyzing the Auditor’s Statement: Disclaimer of Opinion

Benefits of a Formal Investment Policy Statement