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02 Jun 2011
MPS HAVE WRITTEN to Royal Bank of Scotland to accuse it of using International Financial Reporting Standards to favourably distort its financial position by as much as £25bn.
This further attack on banks' accounting has been spearheaded by Steve Baker MP – who recently raised a private members bill calling for lenders to prepare dual accounts to encourage prudence – and former Tory front-bencher David Davis.
Further reading
The letter underlines differences between RBS's expected losses and those calculated by accountants of the government's Asset Protection Scheme, of which RBS is a beneficiary, The Daily Telegraph reports.
Banking specialist Gordon Kerr is the technical expert behind the complaint; he claimed there are inconsistencies between IFRS and UK company law and argued the old UK GAAP system forced banks to account more prudently.
The authors have warned that RBS accounts could be inflated by as much as 50% of the core tier one capital, meaning "on a prudent basis, RBS has a basic capital ratio (leverage on total assets) of 2.75% rather than 5.5% as stated."
RBS has claimed it is following the standards correctly and said its accounting is in line with other financial institutions.
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Visitor comments Add your comment
Are these published audited accounts
If these are published audited accounts then they would have been independely examined, and i as an auditor, would expect that this are would have been reviewed by the auditor. This is a fundermential problem the accountancy profession has over the next few years, that is the move from FRS to IFRS. The Mp's should be well aware of these, what do they expect companies to do, suffer as a result of these imposed changes or benefit from them! Why don't these MP's stop whinging and contirbute to our country better. Don't alow the rules to change and then critise in hindsight.
Posted by: David, 02 Jun 2011 | 11:39
MPs attack RBS Accounting
The objective of IFRS is to bring the financial information as close to reality as possible.
If getting closer to reality means a big change of 50%, the be it so as it implies that the FRS were that far from reality!
Posted by: Enoch Mushango, 02 Jun 2011 | 12:48