Accountants and their regulator, the Financial Reporting Council, are under fire following the Queen Counsel’s George Bompas suggestion that “the legal cornerstone underpinning the entire edifice of bank accounting is defective”.
The Times newspaper had access to Mr George Bompas’s legal opinion dated August 14 strongly criticising the work of accountants at the top of the profession. The senior lawyer commissioned by the Local Authority Pension Fund Forum (LAPFF) - which represents the retirement funds of hundreds of thousands of council workers - decries the lack of oversight by accountants who should be ensuring that banks comply with accounting standards and are failing to provide a “true and fair” picture of the financial situation of Britain’s biggest financial institutions.
Mr Bompas labelled the accounting profession as defensive and self-interested and did not spare criticism of the “excessively cosy relationship the Financial Reporting Council has with the ICAEW”.
He goes further and demands that the European Union throw out the latest proposed standard applicable to banks: the IFRS 9 on financial instruments. The LAPFF did not waste any time insending out his views to key members of the European Parliament with view on stopping the endorsement of the proposal.
Mr Bompas is therefore proposing for regulators toaddress the possibility of reforming accounting andthe auditing of banks rules, the same way it was done for capital requirements and boardroom standards in response to the financial crisis.
However, the watchdog already took the opportunity to answer, saying that “the issue was extensively looked at by counsel, leading to the BIS and the FRC’s statement in 2013 and the updated True and Fair guidance in June 2014.”
Mr Bompas’ opinion can be found here. More information is available in the LAPFF website and here.