The national financial regulator is placing greater significance on accounting, as its supervisory approach increases in 'intensity and intrusiveness'. Speaking at the British Bankers' Association Annual Conference, the chairman of the Financial Services Authority Adair Turner, said that the watchdog had undergone change on back of the financial crisis, which entailed a major shift in the style and focus of supervision. 'We are now involved to a much greater extent than a year ago in the granular analysis of balance sheets, accounting practices and valuation approaches,' Turner said. 'And we have dramatically intensified our use of detailed stress tests to assess - looking forward over five years and using adverse economic parameters - whether banks or building societies can meet our capital adequacy standards, and if not whether they have convincing strategies for meeting possible shortfalls,' he added. Turner also stressed the need to make capital to a degree 'countercyclical - with capital buffers built up in good times to be drawn down in bad times'. 'And we need that approach to be reflected in some way in published accounts, with provision or reserve movements which reflect future possible losses,' he said. He informed bankers present that the International Accounting Standards Board is committed to considering expected loss approaches to provisioning, instead of only losses incurred and that the European supervisory banking group, the Basel Committee, is now working on the possible details of a countercyclical regime. Commenting on future reforms, which include designing the best possible long-term system, Turner ruled out the value-at-risk approach, developed in the 1990s. 'Those VAR approaches are based on over-simplistic maths, they are pro-cyclical, they fail to consider tail events or cross-system risks, and they allowed the explosion of balance sheets and of proprietary risk-taking by banks and shadow banks which played a major role in the origins of the crisis,' said Turner.