Mario Christodoulou, Accountancy Age, Monday 25 October 2010 at 10:17:00

?The banking crisis is largely due to faulty numbers,? claims Tim Bush

A prominent city figure, who believes accounting standards are to blame forthe banking crisis, will give evidence to the House of Lords inquiry into theaudit industry, tomorrow.

Tim Bush, a member of the Urgent Issues Task Force set up by the AccountingStandards Board (ASB), believes international accounting standards overstatedprofits in the lead up to the banking crisis.

Bush will appear before the Economic Affairs Committee looking into thestructure of the audit industry and the behaviour of auditors.

Bush believes international accounting standards, adopted in 2005, led to?false profits? and ?overstated assets? which then led banks to unfairlydistribute funds in the years before the crisis.

?Banks traded, priced credit and paid dividends when they weren?t reallymaking the ?profits? that they were showing and thought they were making,? hesaid.

?The banking crisis is largely due to faulty numbers.?

Bush?s comments raised the ire of the ASB in August when chairman IanMackintosh said the views were not widely held.

?In blaming the accounting standards Mr Bush is attempting to shoot themessenger rather than deal with the true underlying causes of banking failure,?Mackintosh said at the time.

Bush will join Jonathan Hayward, director with consultant Independent Audit;Stephen Kingsley, director with professional services firm FTI Consulting and DrGunnar Niels of consulting firm Oxera.

Further reading:

Analysis:IFRS will be big burden for SMEs