September Essential News

Bank bonuses back?
The issue of bank bonuses has been kicked from the Financial Services Authority’s door back to the government and, finally, to Alistair Darling. The Chancellor says he will look to forge an international solution to the issue at September’s G20 meeting of finance ministers and central bank governors on 4-5 September in London. This follows reaction to the FSA’s code of conduct which many think has gone too soft on pay and bonuses. FSA chief executive Hector Sants defended it, saying that the agency “repeatedly said we are not a pay regulator” and that “introducing an absolute cap on bankers’ pay is not a decision we were ever going to be taking.” Further stoking the debate, Royal Bank of Scotland has said it will pay its new head of UK retail, Brian Hartzer, a £2.3m bonus, £1m of which is an award for staying with RBS for two years.

FD audit survey
The quality of auditing is under question and Financial Director is seeking the thoughts of FDs on the matter. Take part in our confidential survey by visiting
http://tinyurl.com/FDauditsurvey

Madoff CFO guilty
Madoff Securities’ former CFO Frank DiPascali has pleaded guilty to ten criminal charges brought by the Securities and Exchange Commission as it emerged that he knew Bernard Madoff’s business was fraudulent and conspired with Madoff in perjury, tax evasion and falsifying records. “It was all fake. It was all fictitious,” DiPascali said. Click here for more.

Lamont at FD summit 2009
Former Chancellor of the Exchequer Lord (Norman) Lamont is our dinner speaker at this year’s Financial Director Summit, on 17-18 September at the Four Seasons hotel in Hampshire. Join us to hear from and meet FDs of Morrisons, Standard Chartered, BBC, Hiscox and more.
See the full schedule at www.financialdirector.co.uk/summit and see if you qualify for a discount on one of our last delegate places by contacting briony.thompson@incisivemedia.com

SFO cans MG Rover probe
The Serious Fraud Office said it will not carry out a criminal investigation into the ‘Phoenix Four’ and the demise of MG Rover. An initial report on the case by BDO Stoy Hayward was referred to the SFO in July by Lord Mandelson, but on the advice of its general counsel and a team of SFO investigators, it decided not to proceed.

Ex-AIG CFO pays SEC charges
Former American International Group CFO Howard Smith paid the Securities & Exchange Commission $1.5m to settle charges of being responsible for ‘material misstatements’ leading the company to create a false impression that it was meeting or exceeding earnings and growth targets. Ex-CEO Hank Greenberg paid $15m for the same charges: neither admitted any wrongdoing.

More Northern Rock losses
Nationalised lender Northern Rock said in its August half-year results that its statutory loss before tax was £724.2m in the first six months of 2009 ­ compared with £585.4m the same time in 2008 ­ which includes a hedge accounting volatility charge of £298.2m and a rebate for charges on government funding and guarantee costs expected to be received upon approval of state aid from the EU of £156.4m.

Public finance debt balloons
UK public sector finances plunged into a deficit of £5.1bn in July 2009, compared with a surplus of £7.8bn in July 2008, the Office for National Statistics has said. Net borrowing rose to £8.0bn in July compared with net borrowing of £5.2bn the same time in 2008. Public sector debt as a percentage of GDP rose to 56.8% at the end of July compared with 43.5% at end of July 2008.

TECHNICAL UPDATE
Financial reporting
A consultation paper issued by the Accounting Standards Board paves the way for the abolition of mainstream UK GAAP. It suggests a three-tiered approach in which (i) publicly-accountable organisations use IFRS; (ii) other organisations (other than the smallest) use the recently-issued IFRS for SMEs; and (iii) the smallest organisations could continue to use the UK Financial Reporting Standard for Smaller Entities (FRSSE).
www.frc.org.uk/asb

Corporate governance
The Financial Services Authority published a new code of practice for bankers’ remuneration, amid accusations that it had ‘gone soft’ on pay. The code aims to focus board attention on risk management and sustainability as well as ensuring that individual compensation awards provide the right incentives.
www.fsa.gov.uk

Auditing
A landmark ruling in the House of Lords decided that accountancy firm Moore Stephens had not been negligent in its audit of insolvent grain trader Stone & Rolls. Tim Strong of law firm Barlow Lyde & Gilbert said the ruling did not affect audits of the largest companies, however: “It is quite narrow in principle,” he said. “It’s relevant for the mid-tier which deals with a lot of ‘one-man companies’ and smaller businesses run by families, but it’s unlikely to have an impact on the biggest cases.”
www.financialdirector.co.uk/2247297