The first phase of the audit focused on potential overcharges associated with the fraudulent transactions identified by federal investigators and an assessment of the internal controls surrounding the fraudulent transactions.

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It had established its own internal protection against losing money with AIG by offsetting transactions where it bought protection against AIG failing.

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Colorado, overstretched, is passing responsibility for these to the federal Internal Revenue Service, which has conducted 250 audits on Colorado easement transactions in the past 14-16 months.

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In October 2004 Congress mandated big penalties for taxpayers who use a gambit on the Internal Revenue Service's list of "Abusive Tax Shelters and Transactions, " then fail to flag it on their tax returns.

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And yet, despite their inherent fuzziness and lack of "significant operational content", despite the lack of formal checks on banks' internal procedures for coming up with these rates, Euribor and Libor are the benchmark for pricing transactions worth trillions of dollars.

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