A prominent city figure, who believes accounting standards are to blame for
the banking crisis, will give evidence to the House of Lords inquiry into the
audit industry tomorrow.
Tim Bush, a member of the Urgent Issues Task Force set up by the Accounting
Standards Board (ASB), believes international accounting standards overstated
profits in the lead up to the banking crisis.
Bush will appear before the Economic Affairs Committee looking into the
structure of the audit industry and the behaviour of auditors.
Bush believes international accounting standards, adopted in 2005, led to
“false profits” and “overstated assets” which then led banks to unfairly
distribute funds in the years before the crisis.
“Banks traded, priced credit and paid dividends when they weren’t really
making the ‘profits’ that they were showing and thought they were making,” he
“The banking crisis is largely due to faulty numbers.”
Bush’s comments raised the ire of the ASB in August when chairman Ian
Mackintosh said the views were not widely held.
“In blaming the accounting standards Mr Bush is attempting to shoot the
messenger rather than deal with the true underlying causes of banking failure,”
Mackintosh said at the time.
Bush will join Jonathan Hayward, director with consultant Independent Audit;
Stephen Kingsley, director with professional services firm FTI Consulting; and
Dr Gunnar Niels of consulting firm Oxera.
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