getting the numbers right a progress report tim bush head of governance and financial analysis pirc...

Getting the numbers right

A progress report

Tim BushHead of Governance and Financial Analysis

PIRC Ltd(Research & engagement partner to LAPFF)

2

??

© LAPFF, 2013 Getting the numbers right | Tim Bush

3

2005 Iain Richards

• “Bringing Audit Back from the brink”

• Main theme that auditors were losing the plot.

• Became clear that accounting standard setters had lost the plot.

• Prophetic. • But it went over the brink....

© LAPFF, 2013 Getting the numbers right | Tim Bush

4

2011 LAPFF Banks Post Mortem

• It happened.

• Near total collapse of UK and Irish capital adequacy regimes.

• Became clear that accounting standard setters had lost the plot and FSA had gone along with it.

© LAPFF, 2013Getting the numbers right | Tim Bush

5

Who left the gate open?

Some things are quite difficult to own up to....

© LAPFF, 2013 Getting the numbers right | Tim Bush

6

What next?

?© LAPFF, 2013 Getting the numbers right | Tim Bush

7

The Accountants, FRC & FSA

© LAPFF, 2013 Getting the numbers right | Tim Bush

8

Motto of the Accountants

Complicate

Distract

Confuse

© LAPFF, 2013 Getting the numbers right | Tim Bush

9

LAPPF Crying Wolf?

• LAPFF puts out estimates of losses in banks from 2011

• Is dismissed in many quarters....

© LAPFF, 2013 Getting the numbers right | Tim Bush

10

PRA to the rescue...

• PRA November 2012

• Industry wide estimate of losses still in system £50bn, similar to LAPFF

© LAPFF, 2013

• May 2013 PRA puts out the numbers by bank• Co-op Bank is bust• RBS totally dysfunctional. CEO exits.

Reprivatisation not in sight.

Getting the numbers right | Tim Bush

11

Legal Opinion – George Bompas QC

• LAPFF

• Threadneedle

• USS

• UK Shareholders

• Company Law should prevail over standards not consistent with T&FV

• Specific IFRS outcomes problematic

• Confusion

© LAPFF, 2013 Getting the numbers right | Tim Bush

12

FRC goes back to its QC

• The Bompas questions were:– Rephrased and not

answered– The one question

answered-excluded cases & basic reading of the statute

– And self referential (i.e. own prior work).

• Confusion reigns.

© LAPFF, 20132 Getting the numbers right | Tim Bush

13

Where next?

• All UK investment bodies have signed up to the issues that the investor coalition raised:

– T&FV

– Prudence

– Maintenance of capital

© LAPFF, 2013 Getting the numbers right | Tim Bush

14

To Be Continued

© LAPFF, 2013 Getting the numbers right | Tim Bush