Washington ? Mortgage-market giant Freddie Mac disclosed Friday that it had inflated its earnings for 2001 in financial reports by nearly $1 billion, the first time in its monthslong accounting crisis that it acknowledged overstating profits.

And a review commissioned by the company found that Freddie Mac’s now-ousted top executives were aware of accounting manipulations used to draw a distorted picture of its finances. The review by a law firm also uncovered additional instances of questionable transactions undertaken by executives to manipulate earnings.

The disclosures came as Freddie Mac said its overall earnings were being restated higher by $5 billion in a long-awaited adjustment. The underreported earnings of $4.4 billion for 2000-2002 were close to what the government-sponsored company had estimated in September. In addition, Freddie Mac said that $600 million had been underreported for periods before 2000.