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)

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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....


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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....


http://www.google.co.uk/url?sa=i&source=images&cd=&cad=rja&docid=hR8pfTVuwFVYWM&tbnid=wxlRsltdzRcF4M:&ved=0CAgQjRwwAA&url=http://www.telegraph.co.uk/news/uknews/6674766/Cows-stampede-through-quiet-housing-estate.html&ei=rnCXUsDuEYaP7AaIwIHIAQ&psig=AFQjCNEhI8KQ1PNpOlTd2no8WLbhpTOC2Q&ust=1385742894440671

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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



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LAPPF Crying Wolf?

• LAPFF puts out estimates of losses in banks from 2011

• Is dismissed in many quarters....



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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



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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.



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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



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To Be Continued



Getting the numbers right A progress report Tim Bush Head of Governance and Financial Analysis PIRC...

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