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The Parliamentary Commission on Banking Standards said auditors – who vet company financial statements on behalf of investors – had failed to give warning of “risks being added to balance sheets throughout the period of highly leveraged banking expansion”.
“Audited accounts conspicuously failed accurately to inform their users about the financial condition of banks”, the commission said in its report, released on Wednesday. The commission also said it was concerned at the lack of progress in reforming the accounting rules that govern the way banks set aside money to cover soured loans.
Amid criticism that they are too soft and allow banks to set aside “too little, too late”, the rules were supposed to be rewritten in a globally-consistent way that would make them more forward-looking and conservative.
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