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16 Mar 2009
The Turner report on reforming financial regulations, due to be published on Wednesday, has heard complaints from banks that accounting rules have worsened the economic crisis, the Financial Times reported.
Banks have complained that accounting rules have prevented them from making provisions for future losses by forcing them to mark assets to market prices when they have no intention of selling, the newspaper said.
Accountants fear that if clumsy changes were introduced to the way banks account for any provisions they could leave managers with too much latitude and risk some choosing to 'smooth' earnings to cover poor performance, the FT said.
The FSA could only recommend a change to accounting rules, although accountants told the FT that Lord Turner 'gets' their concerns.
The FT also said that the prime minister, Gordon Brown, believes Wednesday's report from Lord Turner, chairman of the FSA, will also provide valuable ammunition in Britain's drive for global regulatory reforms at next month's G20 summit.
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Briefings
By looking at the reasons supplier statements became unfashionable, and the reasons why it is different today, this paper delves into the many benefits that can be obtained by automating the process.
Having a real and true view of your organisation’s current financial position, and having the right systems and processes in place, will ensure that you can make strong choices and are ready to capitalise on opportunities
AccountancyAgeInsight is a frequently updated resource centre for finance professionals, offering a free and easy-to-use digital library of briefings, white papers and other information resources. 
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Use or useless?
I'm not an expert but the standard setters seem to be coming up with increasingly silly standards - at least in so far as they achieve unintended consequences.
Mark-to-market strikes me as forcing an unrealistic view of the business into the accounts, if there is no intention of selling the asset and if it is being held long-term. Is manufacturing industry being forced to value plant and machinery on a market basis? No? Why not? Can someone explain the philosophical difference? "Because there is ready market for financial assets" is not a valid answer by the way. There is a ready market for scrap metal as well.
I believe similar distorted thinking has led to holes in pension funds that aren't there if you look at likely cash flows rather than what the standards require.
I seem to recall a time when British accountants tried to take a common-sense / pragmatic view of what reporting was for and not a legalistic but useless approach.
Posted by: Duncan, 16 Mar 2009 | 00:00
I think the gentelman is ignored of a few facts
I believe there is a standard on property , plant and equipment that allows revision of estimates on account of PPE. Also impairment on assets is also allowed therefore i dont believe thats a valid reason not to use fair value accounting.
Posted by: Suleman Ullah Khan, 17 Mar 2009 | 00:00