Kamall welcomes investigative spotlight on bank accountancy standards

24-Sep-2013 @ 19:0

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Anthea McIntyre Anthea McIntyre

Anthea McIntyre Anthea McIntyre

The European Parliament's Economic Monetary Affairs Committee today voted to press ahead with a major investigation into the international accounting standards used by banks (International Financial Reporting Standards or IFRS) and their role in the financial crisis.

After several months of negotiations, MEPs voted for a proposal that should ensure European accounting concepts are respected by global accounting bodies.

The European Commission plans to spend around ?60 million on funding the European Financial Reporting Advisory Group and the International Accounting Standards Board (IASB) from 2014 to 2020.

Syed Kamall MEP, Conservative spokesman on Economic and Monetary Affairs committee, who built a coalition with the other major political groups on the issue, has called for this funding to be disbursed only if the bodies in question respect European accounting law.

Dr Kamall said: "This is a major step forward in raising awareness of the role of accounting standards in the financial crisis. Investor groups have questioned whether the standards were faulty and overly complex, thereby allowing banks to pay bonuses out of non-existent reserves and to avoid provisioning for potential loan losses.

"Today, MEPs have sent a strong signal to the bodies who set these standards that the status quo is unacceptable. I welcome the IASB's work on updating various standards and its own conceptual framework, but they should be more explicit in driving better corporate governance, rather than regarding accounts as being just an interesting document for investors.

"Following a legal opinion in the UK which identified potential legal problems with IFRS, it is important that the issues raised, such as whether IFRS result in a true and fair view, are investigated thoroughly.

"I am pleased that today we have given the Commission a mandate to look at the compatibility of IFRS with European company law, and I hope that the IFRS Foundation recognises that if it wants public money, it must address the concerns of investors.

"Negotiations will now begin with the member states and the European Commission, with a view to finalising the programme by the end of the year."

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