Bank financial reporting

The recommendations of the recent report by the House of Lords select committee on economic affairs, Auditors: Market concentration and their role, could result in UK banks returning to the lowest common denominator of financial reporting: the use of hidden reserves to smooth out good and bad years. The recommendations reveal little understanding of UK GAAP and International Financial Reporting Standards (IFRS), and ignore the ease with which unrealised profits can be converted into realised profits. But if the committee’s conclusions are correct, they imply that UK banks incorrectly reported their transition from UK GAAP to IFRS.