Hector Sants, the chief executive of the
Financial Services Authority, delivered a
speech last week on the subject of banking regulation. Whilst he repeated many points he has already made regarding the FSA's scrutiny of directors, his following comments are worth quoting because they provide an insight into something that has not, so far, attracted much comment: the FSA's engagement with regulated firms' auditors.
As part of our intensive supervision we have already instituted a programme of at least annual meetings with auditors of our high-impact firms. As part of these meetings we will be discussing accounting policies, and the processes through which they are implemented, in more detail with management and auditors, especially in areas where we perceive that the individual institution may be an outlier in terms of its valuation approach to specific instruments. From our discussions with auditors, we believe they will welcome this greater level of engagement with the FSA. We do of course acknowledge that a firm with an ‘outlier’ valuation may be able to convince us that it is, in fact, more compelling than the valuation applied by the majority.
In addition, in my view the audit profession within the UK should consider whether it would be appropriate to take further steps to strengthen the ability of the profession to identify instruments where there may be particular scope for divergence in valuations, and to share professional experience in determining whether particular valuations are consistent with the measurement requirements set out in accounting standards".
No comments:
Post a Comment