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Getting the numbers right
A progress report
Tim BushHead of Governance and Financial Analysis
PIRC Ltd(Research & engagement partner to LAPFF)
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??
© LAPFF, 2013 Getting the numbers right | Tim Bush
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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
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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
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Who left the gate open?
Some things are quite difficult to own up to....
© LAPFF, 2013 Getting the numbers right | Tim Bush
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What next?
?© LAPFF, 2013 Getting the numbers right | Tim Bush
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The Accountants, FRC & FSA
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Motto of the Accountants
Complicate
Distract
Confuse
© LAPFF, 2013 Getting the numbers right | Tim Bush
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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
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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
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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
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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
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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
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To Be Continued
© LAPFF, 2013 Getting the numbers right | Tim Bush