They say they will use some of the money made this year to cover those deferred expenses.

The investigation found at least one instance where the company deferred expenses to meet executive bonus targets.

Deferred expenses show up as an asset on the balance sheet and are amortized over time.

The report accused Fannie Mae executives of using improper "cookie jar" reserves and deferred expenses to smooth earnings and meet profit targets.

In September 2004, Ofheo said in a preliminary report that Fannie used improper "cookie jar" reserves and deferred expenses to smooth earnings and meet profit targets.

Two reports released earlier this year concluded that Fannie Mae improperly used financial reserves and deferred expenses to meet profit goals, which underpinned the payment of millions in executive bonuses.

DEFERRED EXPENSES - A company's costs should be matched against the revenues they produce.

It said it did not expect such interest expense and deferred expenses to have a material impact on future results for both the quarter and 6 months, and the 6 months also included tax benefit of $155,000.

Prepaid expenses, such as employee wages or subcontractor fees paid out or promised, are not recognized as expenses (cost of goods sold), but as assets (deferred expenses), until the actual products are sold.

A combination of new laws, old decisions, deferred expenses, poor management, and the quirks of Federal accounting are forcing the department to seek tens of billions of dollars in expanded budget authority over the next few years just to house the families it is now assisting.

Mr. Baker also sent a letter to the S.E.C. asking it to examine $200 million in deferred expenses in 1998 and whether, as Ofheo concluded, it was done to meet earnings projections that allowed executives to win their maximum bonuses under an employee incentive program.

Deferred expenses (or prepaid expenses or prepayment) is an asset, such as cash paid out TO a counterpart for goods or services to be received in a latter accounting period when fulfilling the promise to pay is actually acknowledged, the related expense item is recognized, and the same amount is deducted from prepayments.