Brown vows to end off-balance sheet accounting

The prime minister has vowed to force banks to put their off-balance sheet
liabilities into their books.

Speaking to Sky News yesterday, Gordon Brown signaled that it was ‘not
acceptable’ that banks could fail to declare bad assets and that he wanted ‘all
companies to bring out their bad assets and put them back on their balance sheet
so the financial system can move forward’.

Banks have faced widespread criticism for the huge special vehicles they
helped set up and partly supported, but which did not need to be declared on
balance sheet under the accounting rules at the time.

The precise extent of risk that fell on the banks has been unclear to
investors, and the
IASB
is working on plans to develop parallel balance sheets to show the
liabilities.

The interview is to be screened on Sky News tonight.

Shadow chancellor George Osborne said: ‘Gordon Brown now says he wants to ”
clean up” the City. He seems to forget that he is the man who, in ten years as
chancellor, created the current system of regulation. For ten years he boasted
about his achievements. Today he is trying to disown them.’

Further Reading:

Read
about the IASB’s response to the credit crunch