I was thinking about this. A chartiable explaination would be that individual companies in the group have proper balance sheets but there was no nice collation of just the material assets of the whole group.

For many businesses, such a thing isn’t really possible anyway (without manually maintaining a bunch of excel sheets for instance). A lot of large important things are done by a couple of folks poking and prodding and spreadsheets, then making decisions.

> How in the world is a balance sheet not a report that is generated by a system, viewable by any executive? Did they not have a CFO or any finance people or accountants?

Depending on your line of business, this is actually not a simple thing when you're trying to mark assets to market in a meaningful way. When everything you own is liquid, it's one thing. When things are less liquid, it's another. This is true even of completely legitimate businesses.

But isn’t that basically the line of business of an exchange and a trading firm, supposedly one specializing in arbitrage? And despite its difficulty, which I can understand, it still seems like something that should be a bit more automated than the CEO typing them into a spreadsheet a week before the company collapses and warning readers of the “obvious” chance of typos.

Erm yes you are correct, this is the line of business they’re in and they should have had better controls for valuing their assets.

Typically there’s a 3rd party fund administrator whose core responsibilities include calculating the value (NAV) of the fund.

Sometimes funds have Level 2 or Level 3 assets, which may require management effort to value and may not have real-time pricing available.

https://www.investopedia.com/terms/l/level2_assets.asp

https://www.investopedia.com/terms/l/level3_assets.asp

> Did they not have a CFO or any finance people or accountants?

Perhaps not?

"If you take a look at the about FTX page, it shows six senior team members: the CEO, the COO, two leaders on tech and two on compliance and legal. Something is missing. For a company managing billions of client funds, $16 billion according to the Wall Street Journal (WSJ), is it not odd that there is no Chief Financial Officer (CFO)?"

https://www.ledgerinsights.com/ftx-warning-signs-no-cfo/

To be fair, it’s quite common for them to be generated by someone in finance and then distributed.

Of course, it also happens sometimes that they are cooked in some specific way, and that is used to hide that fact.

You might be surprised at the percentage of the business world that is run on spreadsheets.

I’m not surprised by spreadsheets at all. They’re extremely powerful, and I know they’re used heavily. But this was clearly a document just basically made up by the CEO on the spot.

Excel and Google Sheets can both be connected to data via APIs. Click a little refresh button and it'll pull in the latest data, run the formulas, and update all the sums and charts. This stuff goes back to the 1990s, and I've seen non-tech-literate secretaries set it up. It can be as simple as dumping CSV files to a file share and just loading that into a worksheet or two.

The fact that a company managing billions of dollars couldn't even do this much is very, very telling.