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Banks: Accountancy

Business, Enterprise and Regulatory Reform written question – answered on 1st February 2008.

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Photo of Austin Mitchell Austin Mitchell Labour, Great Grimsby

To ask the Secretary of State for Business, Enterprise and Regulatory Reform

(1) if he will appoint an independent inquiry into the way banks have accounted for subprime loans;

(2) if he will investigate the extent of off balance sheet accounting by banks;

(3) what discussions he has held with the auditors of Northern Rock in connection with the company's accounting practices.

Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

I have been asked to reply.

The supervision of banks in the UK is a matter for the Financial Services Authority (FSA), acting on an independent basis. The Treasury has not held discussions with the auditors of Northern Rock on its accounting practices. The accounting treatment of assets and liabilities in banks is governed by standards proposed by the International Accounting Standards Board (IASB) and adopted by the EU. The IASB is re-examining through its consultative process the accounting standards for consolidation of exposures on a bank's balance sheet, with a paper planned for the second half of 2008. The Government, with the FSA and the Financial Reporting Council, will be involved in the development and adoption of any new or amended EU standard.

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