In an attempt to stop the market's guessing, Freddie Mac (NYSE:FRE) gave an update today on its internal accounting investigation's findings. A Wall Street Journal article last week speculated that the congressionally chartered entity could restate between $1 billion and $3 billion in earnings for its last three years. Turns out that an even greater amount than that may be involved.

Freddie Mac will restate somewhere between $1.5 billion and $4.5 billion, which will boost its earnings in 2000, 2001, and 2002. The firm hopes to have its investigation and restatement completed by the third quarter. It noted that, since the restatement process isn't finished yet, the actual results could differ from these estimates.

The restatement will make the reported earnings from the involved fiscal periods more volatile. In addition, it necessarily means that Freddie Mac's earnings in the future also will be much more volatile and difficult to predict. A market accustomed to a steady earnings stream from the quasi-governmental agency will have to adjust its expectations from now on.

One curious thing from Freddie Mac's press release today is the following statement: "The principal factors thus far identified by Board Counsel are lack of sufficient accounting expertise and internal control and management weaknesses as a consequence of which Freddie Mac personnel made numerous errors in applying Generally Accepted Accounting Principles (GAAP)."

Now, it's no surprise that internal control and management weaknesses were a problem for Freddie Mac. The company made headlines when it cleaned out three members of its top management a few weeks ago.

However, if Freddie Mac, which has routinely been using derivatives to reduce interest rate risk for years now, didn't have the necessary accounting staff to deal with the complex transactions, what other companies might also be lacking here? Of course, Freddie Mac may just be trying to sway the argument more towards "We honestly messed up the accounting" and away from the more onerous "We messed it up on purpose to paint a pretty picture" view.

Meanwhile, Rep. Richard Baker (R-La.) charged ahead with his political assault on Freddie Mac. At a hearing today, he asked the General Accounting Office to review the company's accounting scandal. The move comes a day after he introduced a bill to strengthen governmental oversight of both Freddie Mac and Fannie Mae (NYSE:FNM).

For shareholders, despite Freddie's announcement today, the matter is still clouded in uncertainty.