Bank's Accounts

CJCCJC Font Of All KnowledgeRegistered Posts: 1,657
The recently published accounts of RBS (Robert Peston gives a useful summary) must surely stand as a milestone in the use of accounting to obscure wtf is actually going on in a business. Some 274 densly packed pages of tables and charts will leave all but the smartest account none the wiser as to such things as how much actual profit was made*, what levels of exposure still remain and exactly what amount of assets the bank truly has**. Now I'm sure the extremely well-paid accountants at RBS will have ensured that everything conforms to the IASs and will sail through it's audit but right there in the first chapter of my Unit 11 textbook it states that 'Understandability' is one of the qualitative characteristics required by the Framework. Hmmm. No doubt hidden somewhere in there is a 'true and fair' representation of the state of the business (very likely to be parlous) but if anyone can find it within the smoke and mirrors of this report good luck to them.


* You can take your pick from several different measures depending on whether you're using the calculation for tax purposes or to inspire shareholder confidence.

** Many (but not all) of which are valued using the mark-to-market method (aka mark-to-fantasy) that was so useful to Enron in disguising it's assets were mostly worthless.

Comments

  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    Its the banks making the system work for them yet again. They must have such amazingly convoluted accounting systems, along with all the financial instruments possible, and then dotted around the global economy.

    Then when it comes to the small penalties and taxes paid, its the shareholder that will pay, not the banker!
  • blobbyhblobbyh Font Of All Knowledge Registered Posts: 2,415
    As a victim of RBS, I detest them with a vengeance and would love to see their past and present directors burn one day for the stress and suffering they caused to me and tens of thousands of others.

    Absolute scum.
  • Aaron C RescueAaron C Rescue Feels At Home Registered Posts: 76
    Anyone see what Mervyn King has had to say to the Treasury select committee over who is to blame for the financial crash?
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    Who was to blame? Haven't we already figured out it was the evil bankers?? :D

    Glad there keeping interest rates low, I think raising them would definitely make things worse, and have little effect on inflation, due to the factors which are causing inflation.
  • Aaron C RescueAaron C Rescue Feels At Home Registered Posts: 76
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    Its right what he says, banks should be suffering more instead of cuts to public spending. They are carrying on as normal as if its nothing to do with them, and people in general are doing nothing about it, as long as the cuts don't effect them.
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