International accounting standard-setters have at last recognised the error of their ways and relented on the question of prudence, which they plan to re-instate as a fundamental accounting principle. Bank auditors will have to form an independent view on loan recoverability, rather than rely on the potentially biased judgements of management. A regime that […]

After six months the fall-out from Tesco’s £263 million half-year profit overstatement still reverberates. The FRC now expects companies to give full and fair disclosure of how they account for income in the areas that brought Tesco into disrepute. Ocado is the first to report under the new regime, yet its accounts give no figures […]

Any columnist writing about financial misdeeds rarely lacks material. Buccaneering chief executives and ineffective auditors are invariably centre-stage – but what of the wise owls making up the panel of non-executive directors? How effective are they as a bulwark against executive opportunism or worse? I remember one prominent public company CEO, the darling of his […]

Banks’ auditors have had to deal with the absurdity of accounts failing the ‘true & fair’ test for the very reason that they comply with a flawed standard. Auditors accused of rubber-stamping defective accounts of banks should now feel some relief. The International Accounting Standards Board appears at last to acknowledge the folly of its […]

Concepts, like Plato’s “forms”, exist in the world of ideas. Compared with their myriad manifestations, the concepts of, say, “window”, “chair” or “coin” exist in the mind, immutable and unchanging. Similarly, our structured accounting lexicon began with broad acceptance of its underlying concepts. These criteria were treated as assumptions, laying the groundwork for that other […]

Most penalties for financial wrongdoing are levied on institutions rather than the inventive executives who master-mind these grubby manoeuvres. Regulatory authorities themselves do not benefit from the fines they collect, now amounting to serious money – over £500 million in this year alone. Apart from relatively modest retentions to cover regulators’ costs, the money is […]

Legal claims against top Wall Street banks arising out of the financial crisis have, so far, settled at over $100 billion, and no doubt there will be more. Claims against audit firms for their involvement will surely follow, and it will be interesting to see how far IFRS-compliance will serve as the defence of choice.  […]

AUDITING BANKS’ TOXIC DEBTS Ever since the financial markets registered their massive tumble in 2008, when Lehman Brothers was left to drown in its swamp of toxic debts, banks’ managements, regulators, rating agencies and auditors have been muttering that banks must rebuild their balance sheets in line with successive Basel capital adequacy criteria. Their auditors, […]

UK Companies Acts since 1947 have stipulated that audited accounts of companies should give a ‘true and fair view’. After 66 years the meaning of that elusive formula continues to be hotly debated by accounting bodies, regulators, representatives of investors and pension funds, civil servants and politicians. Prior to that time the Acts used the […]

The subject of Europe polarises any otherwise rational debate. Obsessional prejudice, whether pro or con, induces deafness and drives out reason. More inflammatory even than party politics (where spin and expediency have blunted the ideals), passions over Europe (the Union, not the continent) have taken on the trappings of a belief system, susceptible to neither […]