ABI: Valuation of financial instruments: A message for audit comittees

ABI: Valuation of financial instruments: A message for audit comittees

ABI: Valuation of financial instruments: A message for audit comittees

Commenting on the Global Public Policy Committee’s (GPPC*) paper on Valuation of Financial Instruments under IFRS, Peter Montagnon, the ABI’s Director of Investment Affairs, urged audit committees to pay close attention to it. He said:

“Our Investment Committee has discussed current market problems on several occasions and drawn a firm conclusion that greater clarity is needed. Members have been concerned over the lack of transparency with regard to SIVs and off balance sheet business and we look to audit committees, especially in the current situation, to ensure that relevant information is properly reported. This includes all facts needed for shareholders to have a proper understanding of the substance.

The auditors have produced a clear statement of what the current standards require. Our members are strongly supportive of this effort to ensure that the forthcoming reporting round achieves clarity and urge regulators also to throw their weight behind this objective. Audit committees can meanwhile help by explaining clearly the procedures they have undertaken to ensure the preparation of accounts is based on sound and considered judgement. Auditors can help by working closely with audit committees to this end.”

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*Global Public Policy Committee is made up of the six largest international accounting networks. The report can be seen at any of their websites (eg
http://www.bdointernational.com/ )

Notes for Editors

1. Peter Montagnon raised the role of accounting and its impact on Financial Stability in front of the Treasury Select Committee on December 4. He said then:

“One area where we do need more transparency is the reporting of this business in financial institutions. We need to know with much greater clarity what is on, what is off and what has potential to come back onto the balance sheet than perhaps we did in the past. As investors who hold shares in financial institutions this is something that should be looked at closely. In addition, we also want to have a close look at the role of audit committees and risk committees in managing these risks and deciding how they should be reported. That is one area of transparency that we would like to see improved”

2. Enquiries to:
Alan Leaman 020 7216 7440 (Mobile: 07957 482 330)
Malcolm Tarling 020 7216 7410 (Mobile: 07776 147 667)
Jonathan French 020 7216 7392 (Mobile: 07958 330 480)
Erfan Hussain 020 7216 7411 (Mobile: 07712 841 184)
Kelly Ostler 020 7216 7415 (Mobile: 07968 364 302)

3. The ABI is the trade association for Britain’s insurance industry. Its nearly 400 member companies provide over 94% of the insurance business in the UK. It represents insurance companies to the Government, and to the regulatory and other agencies, and is an influential voice on public policy and financial services issues. ABI member companies hold up to a sixth of all investments traded on the London Stock Exchange, on behalf of millions of pensioners and savers.

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