FRENCH AUDITORS fell short when valuing recent losses on Greek government bonds, according to UK regulator Financial Reporting Council.
Chief executive Stephen Haddrill (pictured) told The Financial Times: “I don’t see strong auditing going on there”, noting French banks and insurers posted smaller losses than European peers and auditors duly signed them off.
His criticism comes after a quintessentially French practice, joint audit, was championed in a leaked European Commission audit reform paper.
The FRC views the paper as too radical, saying headline proposals such as splitting the provision of audit and non-audit services for the largest firms, mandatory rotation and joint audit will harm quality and drive up costs.
“When we saw what happened on the impairment of Greek debt, the one country which has some of these proposals already did not go forward with the impairment to the extent that other countries did, i.e. France,”
French banks and insurers marked down their saleable Greek debt holdings by 21%, while other European peers followed the 50% discount implied by market prices.
A final version of the EC audit paper is expected next month.
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