Accounting Perversion in Bank Financial Statements
Email 2nd May 2013
And to the Technical Director
[Member Institute/Association, IFAC]
The IICPA wishes to share its letter of 1st May 2013 to the FASB and the IASB with you for whatever advice or action you deem appropriate.
See letter to FASB, IASB, IFAC accounting bodies.
We have been concerned for some time about the abuse of accounting by Monetary Financial Institutions (MFIs), using double-entry bookkeeping not only to
recognize transactions but to create so called current assets and liabilities out of nothing, labeling them as (1) loans receivable and (2) demand deposits
that are masquerading as money in dollars, pound sterling, euros, and so on, causing asset bubbles through moral hazard, insolvencies, bankruptcies and the
global financial crisis which is ongoing with no end in sight.
We say that burgeoning national debts are the result of an unwitting assignment of the sovereign’s right to money creation to the MFIs and can easily be reduced
and redeemed, if only we, the public accountants, adhere to and enforce our conceptual frameworks, accounting principles and standards.
The troika’s (EU, ECB, IFM) sanctions in the so called “rescue” of Cyprus from bankruptcy, against Cypriot banks by converting bank deposits into bank equity by force
in order to “recapitalize” the banks is an alarming act that is not being addressed by the accounting profession.
Public accountants appear to be disinterested in matters of deposit creation, whereas it should be of primary concern to us all because we set the accounting standards
that disallow improper creation by disallowing assets to be recorded, created out of nothing and reported, which have no cost basis and are the result of self-dealing,
and so on.
Our primary purpose and motive is to serve the public interest, but instead we aid and abet the creation of MFIs’s financial statements that are more appropriately
described as false and misleading, and too many banks fail just months after publication of the auditors’s “clean opinions."
We would suggest, if your institution has not already done so, to form a task force to review the MFIs’ practices, issue and widely circulate resulting working papers
so that the problem is at least seen to be addressed, if not cured.
Best professional regards,