Myners Belies Auditors’ Claims of Promised Government Aid Prior to Economic Crisis
Speaking before the economic affairs committee of Britain’s upper house of parliament, former minister Paul Myners contradicted claims of the Big Four that the government gave them reassurance to help the troubled banks, prompting them to hand out unqualified endorsements to the banks’ accounts in the lead-up to the 2008 financial meltdown.
Deloitte, together with rest of the Big Four auditing firms, told the House of Lords Economic Affairs Committee on November 2010 the reason they signed off the banks’ accounts as ‘going concerns’ was that the government offered to support these banks if they got into trouble.
The Big Four defended the role of the auditors being scrutinized by the House of Lords Economic Affairs Committee, saying it was not their job to give opinions pertaining to the status of the banks and sound the alarm when the banking sector was in the verge of collapse.
KPMG senior partner John Griffith-Jones said that the basic role of an auditor is to “count the score at the end of the accounting period.”
December 2010, KPMG gave fresh revelation. In a letter addresses to the Lords, the accounting firm said Lord Myners responded to the audit firms’ plea for recapitalization of the failing banks in a meeting December 2008 and gave them assurance that the government would continue its bail-out for the companies that could still be saved from the verge of collapse.
But Myners said Tuesday he only re-echoed to the auditing firms the government’s commitment to help keep financial stability in the country.
“It was not my task to give them comfort,” Myners added.
Myners told the economic affairs committee that he stressed to the Big Four the need to make “clear, fair and honest” annual reports for 2008, adding that he did not give them “some all embracing guarantee that, come what may, that bank shareholders” would be bailed.