RBS ignores accusations of accounting shortfall
RBS declined to respond to a letter warning poor accounting was distorting its profits
RBS REFUSED to respond to accusations of accounting shortcomings, after a group of financial consultants warned it is paying bonuses out of unrealised profits.
A letter from Cobden Partners said the bank was “dangerously undercapitalised” as at 31 December 2010, using accounts from the Treasury’s Asset Protection Scheme to work out what they believe is the true extent of RBS’s losses.
International Financial Reporting Standards came under fire for inconsistencies with UK Company Law; critics claimed the standards allow banks to obfuscate the true nature of their profits and liabilities.
Cobden Partners founder Gordon Kerr said: “Without the exposure of the true state of banks’ accounts as set out in the [recent private member’s] bill, taxpayers, regulators and scruntineers will remain unable to assess or properly regulate our banks.”
The debate is long-running and IFRS supporters deny the accusation that banks are able to wheedle out of prudent accounting, saying provisioning for losses was essentially the same under UK GAAP and the requirement for directors to be prudent remains.