Updated to include Citi comment.

NEW YORK ( TheStreet) -- A high-profile analyst suggested on Monday that Citigroup ( C) management may have violated federal accounting rules by signing off on the bank's 2007 report and not disclosing regulators' concerns.

CLSA analyst Mike Mayo cited recent disclosures by the Financial Crisis Inquiry Commission, which showed that the Federal Reserve and the U.S. Treasury Department's Office of the Comptroller of the Currency had expressed concerns over Citi's losses and internal controls. He says Citi may have violated the Sarbanes Oxley Act, which Congress passed in 2002 after the Enron scandal. It requires extensive disclosures to protect investors against accounting fraud.

"Thus, the lingering question in our mind is why Citi signed off on its 2007 10-K as having effective controls in light of such problems," said Mayo. "This information is still relevant today because it reflects on the magnitude of the risk shortfalls and what we feel is the higher-than-perceived task of turning them around."

Citi spokeswoman Shannon Bell said the bank has no comment on Mayo's report, but implied that his accusations were incorrect in discussing the company's accounting procedures.

"Citi maintains rigorous disclosure controls and procedures to support its CEO and CFO certifications," said Bell. "These controls and procedures were followed in connection with the filing of the 10k in February 2008, and Citi's certifications were entirely appropriate."

The New York-based bank has been facing additional scrutiny since the FCIC documents were unveiled. The bank's problems became evident in November 2007, when it disclosed $8 billion to $11 billion worth of unexpected losses. Those losses were partly due to internal control issues that were too deep to fix with less than two months in the calendar year, Mayo says. Eventually, Citi would be rescued by a $45 billion taxpayer bailout, which it finished repaying in 2010.

Although the apparent control issues happened under previous CEO Chuck Prince, the OCC wrote a seven-page letter to current CEO Vikram Pandit in February 2008 outlining its concerns, just eight days before its 10-K was signed.

Mayo says Citi's board was "uninformed or misinformed" by management and "appeared not to be engaged" in resolving apparent issues. He questioned whether Citi's board has examined the issue in the intervening time and whether the Securities and Exchange Commission or U.S. Justice Department have scrutinized the matter.

Mayo was one of the first analysts to advise investors to sell Citi stock in 2007 and still maintains a sell rating. He has become something of a thorn in management's side by asking tough questions during earnings calls and publicizing a lack of willingness to meet with him as frequently as they do with his peers on Wall Street.

>>>Read More: Wall Street Whispers: The Guts To Say 'Sell'

-- Written by Lauren Tara LaCapra in New York.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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