World accountancy news
US on the road to IFRS
US companies could file accounts using IFRS in 2010, under the detailed roadmap for accounting standards convergence published by the US Securities and Exchange Commission. IFRS would be required for listed US companies by 2014.
Only listed US companies whose industry mostly uses IFRS as the basis for financial reporting would be eligible to elect to use IFRS for filings in 2010. This is designed to provide improved comparability of financial reporting to investors. However, these early adoptors would have to reconcile their accounts with US GAAP.
But several milestones will have to be reached to enable IFRS to be adopted for all US listed companies by 2014. In particular, there will need to be greater convergence between IFRS and US GAAP. Another requirement is for changes to the governance arrangements of the IASB to make it more acceptable to the SEC and US politicians. Improvements in the use of XBRL for the filing of company accounts would also be needed.
Auditors given fraud alert
PCAOB – the US Public Company Accounting Oversight Board – has issued auditors with an alert on the challenges they face during the economic crisis. Auditors should be aware of the extra risks in the current environment, which may require additional emphasis in audits of financial statements and of internal control over financial reporting. This includes how auditors should address the question of whether a company remains a going concern, audits of fair value measurements and the adequacy of disclosures.
Mark Olsen, PCAOB’s Chairman, told a conference on current developments that auditors must also beware of the heightened risk at present of fraud. This means, he said, that auditors must adopt an attitude of greater professional scepticism while the economic climate persists. Areas of greatest attention should include the collectibility of receivables, potential inventory obsolescence and the impairment of other assets.
Siemens’ $1.4bn settlement
Siemens will pay nearly $1.4bn to settle US and German claims against it of paying illegal bribes to foreign government officials to win business. Some $800m will be paid to US authorities – $450m going to the Department of Justice to settle criminal charges and $350m to settle Securities and Exchange Commission charges. A further $569m in fines will be paid to Munich’s Office of the Prosecutor General – to whom the company has previously paid $285m. Siemens was charged with having made bribes to win contracts for transport systems in Venezuela, power plants in Israel, refineries in Mexico, ID cards in Argentina, mobile phone networks in Bangladesh and medical devices in Vietnam, China and Russia – together earning the company $1.1bn in profits.
SEC chief accountant stepping down
Conrad W. Hewitt has stepped down as chief accountant at the Securities and Exchange Commission, after two and a half years in the post. The SEC said that Hewitt had been integral to its work on increasing reporting transparency, guidance on Section 404 of the Sarbanes-Oxley Act and in tackling off-balance sheet accounting practices.
Sovereign wealth fund losses mount
Gulf states’ sovereign wealth funds may have lost a quarter of their value, according to analysts. Funds reported to have made heavy losses include the Abu Dhabi, Kuwait and Dubai investment authorities. It is unclear how badly the Qatar investment fund has fared, while Saudi Arabia’s may have actually gained value because of its conservative investment approach and high levels of exposure to corporate bonds.
SA bank charges must fall
Bank charges in South Africa must be cut, the Competition Commission has ruled. It should be easier to understand how charges are levied by banks and to compare prices between competitors, the Commission says. There should be a standardisation of terminology, a requirement for plain language, a minimum level of information to be supplied on each bank statement, a breakdown of charges and interest and advance notice of new and altered charges. It must also be made easier for customers to switch banks.
KPMG former partners avoid prosecution
US Federal prosecutors are not pursuing cases against 13 KPMG former partners who were indicted in 2006 on charges of conspiracy, tax evasion and fraud, relating to the sale of tax shelters. Two other KPMG former partners have pleaded guilty, while a further four are currently on trial.
IFRS accounts ‘no easier to compare’
Moody’s rating agency says that IFRS accounts are no easier to compare than those prepared under GAAP. It complains of companies and auditors making inconsistent interpretations and a lack of standardisation across territories. A study from Moody’s questions whether IFRS will achieve comparability of company accounts. It says that some items as reported under IFRS – such as financial expenses – are “too often simply unintelligible”, while searching out the true of level of debt is very difficult.
‘Fair value used to boost profits’
Analysts have complained that some real estate companies in the Gulf used fair value calculations to artificially boost reported profits in 2008. Real estate prices in parts of the Middle East continued to inflate through most of 2008, even while they fell in much of the world.
Annual reports ‘not very useful’
Research from ACCA casts doubt on the benefits of annual reports. A study conducted for ACCA found that banking analysts believe banks’ annual reports to be unhelpful. “The findings show that analysts are dismissive of anything other than directly value-relevant numerical data,” said Dr Steve Priddy, director of technical policy and research at ACCA. He suggested there needs to be a debate about whether and how to make narrative reporting more useful.
US gets heavy with UBS
US prosecutors have indicted a senior UBS executive, alleging that he allowed American clients to hide income in overseas accounts to evade tax. Raoul Weil was chairman and chief executive of UBS Global Wealth Management and Businesses Banking and a member of UBS’s Group Executive Board. He resigned his positions on receipt of the indictment to enable him to defend the prosecution. UBS announced in July it was ceasing the provision of cross-border banking services to US-domiciled clients and is co-operating with US authorities in their investigations of allegations that it established illegal tax shelters that hid £20bn in undeclared assets.
E&Y sued over Lehman
A US county’s investment agency has filed a legal action against Lehman Brothers’ executives and its auditors Ernst & Young. The investment pool alleges fraud, deceit and misleading accounting practices by the executives and auditors. The San Mateo fund, in California, lost $150m, which was to spent on schools, a college and roads. Ernst & Young did not respond to a request for a comment.
Firms increase revenues
Despite the economic turmoil, the big accountancy firms significantly increased their revenues in 2008. PwC’s global revenues rose by 8% to $28.2bn, with a 21% rise in earnings in emerging economies. Deloitte’s global revenue was $27.4bn, an increase of 18.6%, with profit per partner in the UK rising to £970,000. Ernst & Young’s worldwide revenues grew by 16.2% to $24.5bn.
Fraud on rise in GCC
Fraud is perceived to be a fast growing problem in GCC states, according to a KPMG survey. Some 43% of respondents to the latest survey regard fraud as a problem for business, compared to 37% in 2004. While only 29% said fraud was a specific problem for their business, 41% said they were aware of fraud within their organisation in the last three years – up from 32% in the last survey. Employees of large organisations were far more likely to report experience of fraud within their business than those working for SMEs.
Beware data thieves
Data thieves are not only online, they may walk into your office, Ernst & Young South Africa has warned. Yvette du Toit, of E&Y’s SA Attack and Penetration unit, says that companies may overlook the threat of people by-passing security guards to gain direct access to companies’ computers. “Once in the building, it is possible to pick up sensitive data from a workgroup printer, sit down at a desk and perhaps use an unlocked computer, rifle through drawers, or ‘accidentally’ knock over the trash can outside the office of a key employee,” she warns.
EU accepts GAAP equivalence
The European Commission has accepted US, Japan, China, Canada, South Korea and India GAAP as equivalent to IFRS. This will eliminate costly and difficult reconciliation requirements. Equivalence with China, Canada, South Korea and India GAAP will be reviewed in 2011. Foreign companies listed in EU countries will be able to file their accounts using these GAAPs as a result.
Russia expects rush of tax avoidance
Russia’s Federal Tax Service predicts a big increase in ‘tax minimisation schemes’, as taxpayers feel the pinch from the recession. The country’s Ministry of Finance reported that tax flows plummeted from 437bn roubles in October to 204bn roubles in November. The fall in receipts from banks is one of the major factors. The FTS has warned companies that it will be more vigilant in monitoring tax returns and payments.
UK accountancy news
Loan facilities not needed for going concern
The absence of confirmed bank facilities does not mean that a company cannot be regarded as a going concern, the Financial Reporting Council has advised. Going concern assessments are “particularly sensitive” in the current economic climate, the FRC explains, requiring “thorough preparation and balanced judgements”.
Updated guidance on going concern assessments has been published by the FRC, containing the key accounting requirements and disclosures related to going concern and liquidity risk. The guidance explains to audit committees the challenges arising from current economic conditions and some suggested questions they should address.
The importance of the FRC guidance was stressed by the Consultative Committee of Accountancy Bodies in a letter to the Financial Times, signed by Helen Brand, ACCA’s Chief Executive. Limitations on access to borrowing facilities need to be disclosed by companies “in an open and transparent way”, said the CCAB. But the need to disclose material uncertainties about continued facilities does not mean a company is not a going concern.
US on the road to IFRS
US companies could file accounts using IFRS in 2010, under the detailed roadmap for accounting standards convergence published by the US Securities and Exchange Commission. IFRS would be required for listed US companies by 2014.
Only listed US companies whose industry mostly uses IFRS as the basis for financial reporting would be eligible to elect to use IFRS for filings in 2010. This is designed to provide improved comparability of financial reporting for investors. However, these early adoptors would have to reconcile their accounts with US GAAP.
But several milestones must be reached to enable IFRS to be adopted for all US listed companies by 2014. In particular, there will need to be greater convergence between IFRS and US GAAP. Another requirement is for changes to the governance arrangements of the IASB to make it more acceptable to the SEC and US politicians. Improvements in the use of XBRL for the filing of company accounts would also be needed.
Nibs
Annual reports ‘not very useful’
Research from ACCA casts doubt on the benefits of annual reports. A study conducted for ACCA by the University of Northumbria and the University of Newcastle found that banking analysts believe banks’ annual reports to be unhelpful. “The findings show that analysts are dismissive of anything other than directly value-relevant numerical data,” said Dr Steve Priddy, director of technical policy and research at ACCA. He suggested there needs to be a debate about whether and how to make narrative reporting more useful.
HMRC ‘to shed another 3,400 jobs’
HMRC has been accused of having secret plans to cut another 3,400 jobs by 2011. The claim was made by the main civil service trade union, the Public and Civil Services Union. It said that HMRC intends to close 93 offices across the UK. Some 17,000 jobs have gone since a rationalisation programme began in 2004. An HMRC spokeswoman responded: “We have not announced any job cuts – this is pure scare-mongering.”
KPMG former partners avoid prosecution
US Federal prosecutors are not pursuing cases against 13 KPMG former partners who were indicted in 2006 on charges of conspiracy, tax evasion and fraud, relating to the sale of tax shelters. Two other KPMG former partners have pleaded guilty, while a further four are currently on trial.
IFRS accounts ‘no easier to compare’
Moody’s rating agency says that IFRS accounts are no easier to compare than those prepared under GAAP. It complains of companies and auditors making inconsistent interpretations and a lack of standardisation across territories. A study from Moody’s questions whether IFRS will achieve comparability of company accounts. It says that some items as reported under IFRS – such as financial expenses – are “too often simply unintelligible”, while searching out the true of level of debt is very difficult.
Accounting shortages remain
Companies and accountancy firms must look beyond the recession and continue to recruit accountants and other specialist finance staff for the long term, say recruitment advisors Robert Half. Failure to do so will stoke a skills shortage later on, it says. Robert Half warns that many new entrants into accountancy are become specialised too soon, missing out on broader experience. It suggests the profession must “rebrand itself to become more attractive to today’s young people”.
‘Suckers list’ warning
UK shareholders’ personal details have been collected onto a database used by fraudsters, the FSA has warned. The database is being used by boiler rooms for high pressure sales of often worthless and untradeable overseas shares. Canadian authorities obtained a copy of the database, which they handed to the FSA. The so-called ‘suckers list’ includes about 11,000 names, addresses and phone numbers.
HMRC extends tax crackdown
HMRC is extending its sweep of banks and building societies, seeking out taxpayers who have failed to disclose their total taxable income. Having forced the largest banks to disclose details of customers with offshore accounts, HMRC says it is taking similar action with the smaller banks and building societies and overseas banks with UK activities. HMRC’s earlier action led to the collection of £450m of undeclared tax, from about 44,000 taxpayers. It is also stepping-up its investigations into owners of UK and overseas properties who have undeclared lettings incomes.
EU gets unqualified audit
EU accounts have been approved without qualification by the European Court of Auditors for the first time since accruals accounting was adopted in 2005. While the auditors gave an unqualified opinion of the legality and regularity of the spending on EU administration, they could not give the same assurance on most spending areas, including for agricultural support and project funding. They reported there is too high a level of error in spending on EU-funded projects, including non-compliance with rules.
Fraud warning to intermediaries
Financial intermediaries are at high risk from fraudsters, the Serious Organised Crime Agency has warned. Criminals are likely to try to obtain clients’ personal information from their offices and IT systems. There has been a particularly high incidence of fraud involving mortgage brokers, as criminals seek to lock-up illegal profits in fixed assets. SOCA has obtained restraint and confiscation orders on £3m worth of assets associated with mortgage fraud in a year, based on over 850 suspicious activity reports from mortgage lenders.
US gets heavy with UBS
US prosecutors have indicted a senior UBS executive, alleging that he allowed American clients to hide income in overseas accounts to evade tax. Raoul Weil was chairman and chief executive of UBS Global Wealth Management and Businesses Banking and a member of UBS’s Group Executive Board. He resigned his positions on receipt of the indictment to enable him to defend the prosecution. UBS announced in July it was ceasing the provision of cross-border banking services to US-domiciled clients and is co-operating with US authorities in their investigations of allegations that it established illegal tax shelters that hid £20bn in undeclared assets.
‘FRS17 is bizarre’
Less weight should be given to FRS17 in measuring pension schemes assets and liabilities, says the UK’s Pensions Regulator. Higher corporate bond yields have caused FRS17 calculations to diverge from other measures, the regulator warns. David Norgrove, chairman, added that accounting rules were ‘bizarre’ when they made pensions deficits appear smaller at a time when asset values were falling, simply because higher short-term corporate bond rates made liabilities seem smaller.
E&Y sued over Lehman
A US county’s investment agency has filed a legal action against Lehman Brothers’ executives and its auditors Ernst & Young. The investment pool alleges fraud, deceit and misleading accounting practices by the executives and auditors. The San Mateo fund, in California, lost $150m, which was to be spent on schools, a college and roads. [comment requested from E&Y]
‘HMRC to shed another 3,400 jobs’
HMRC has been accused of secret plans to cut another 3,400 jobs by 2011. The claim was made by the main civil service trade union, the Public and Civil Services Union. It said that HMRC plans to close 93 offices across the UK. According to the union, 17,000 jobs have gone since a rationalisation programme began in 2004. An HMRC spokeswoman responded: “We have not announced any job cuts – this is pure scare-mongering.”
Insolvencies rise
Company insolvencies were 26.3% higher in the third quarter of 2008 than a year before, according to the latest official figures for England and Wales from the Insolvency Service. Individual insolvencies also rose, though less sharply – up just 4.6% against the same period of a year before. The slower increase in personal insolvencies reflected a significant drop of 3.1% in a year in Individual Voluntary Arrangements. Personal bankruptcies rose by 9.5% over the same period.
Bad times are good for administrators
Accountancy firms’ administration practices are booming. PwC is reported to be earning £200,000 an hour from its work on the Lehman Brothers’ administration – which it says is proving 10 times more complex than the Enron collapse. PwC is also handling the administration of the Royal Worcester and Spode pottery company, founded in 1751. Deloitte is carrying out the administration of Woolworth’s, while Ernst & Young is conducting that of the London Scottish Bank. MFI’s administation is being handled by MCR, a firm specialising in company turnarounds.
FRC increases focus on governance
The Financial Reporting Council proposes to increase its focus on the impact of standards on corporate governance and reporting. In its proposals for priorities and funding, the FRC says it has to balance the immediate financial crisis against longer term reporting concerns. It proposes to increase operating costs by 7%, to £12.7m, in 2009/10, while maintaining current staffing levels.
Foot reviews offshore
The Treasury has commissioned an independent review of British offshore financial centres. It will be led by Michael Foot, the Chairman of the UK office of Promontory Financial Group, a consultancy firm that advises global financial businesses. Foot was previously an executive director of the Bank of England, where he was responsible for regulation.
IFA commits £1m insurance fraud
An IFA has defrauded insurers of over £1m by persuading them to pay up-front commission on fake policies. Philip Bates of Bedford registered companies as Anderson Owen Ltd and Transtone Consulting Ltd, and also traded as Hammond Direct. He has been found guilty of fabricating business to maximise his commissions and was jailed for five years and disqualified from acting as a company director for seven years. Many ‘policyholders’ were unaware that policies had been taken out in their name. Others were mis-sold policies so that Bates could obtain commission. Bates transferred the funds to accounts in Jersey, Guernsey and Monaco.
Adviser lies about FSA authorisation
An advisor has been fined £35,000 by the FSA for falsely claiming to be FSA-authorised, in the first prosecution of its kind. Mayson Shanti placed advertisements in phone directories saying that his business Chase Capital was authorised by the FSA. The business, which is no longer trading, was fined a further £1,000, while both Shanti and Chase Capital were order to pay £1,500 each towards the FSA’s prosecution costs.
Firms increase revenues
Despite the economic turmoil, the big accountancy firms significantly increased their revenues in 2008. PwC’s global revenues rose by 8% to $28.2bn, with a 21% rise in earnings in emerging economies. Deloitte’s global revenue was $27.4bn, an increase of 18.6%, with profit per partner in the UK rising to £970,000. Ernst & Young’s worldwide revenues grew by 16.2% to $24.5bn.
Sage revenues up
Sage, the providers of accountancy software, saw their revenues rise by 7% for the year end 30 September, to £1.3bn. Pre-tax profits rose by 3%, to £273m. Subscription revenues increased by 10% and represent 61% of the company’s income.
Politics news
Corporate governance: its role in the credit crunch
Two ACCA reports – the Corporate Governance and Risk Management Agenda and Corporate Governance and the Credit Crunch – have been launched at the House of Lords. The Agenda contains 10 principles for good corporate governance, including that boards, shareholders and stakeholders must share a common understanding of the purpose and scope of corporate governance. The paper stresses the need for remuneration systems to take risk into account. Corporate Governance and the Credit Crunch considers the root causes of the current global crisis, concluding that most of them are related to poor corporate governance.
‘Fair value brought crisis to fore,” says Tweedie
Without the introduction of fair value accounting the economic collapse might not yet have happened – but when it did, it would have been much worse, Sir David Tweedie, Chairman of the IASB, told the House of Commons Treasury Select Committee. “The beauty about fair value accounting… is that it brought this crisis very, very quickly into the open, and if it had not then I suspect we might still be having sub-prime lending going on, even now, and the disaster would be even worse,” Sir David said. Tweedie added that European Commission pressure on the IASB to allow banks to avoid mark-to-market accounting had caused him to consider resigning. He said that EC pressure “was just a blunt threat to blow the organisation away”. More carve-outs from IASB as a result of EC demands could lead to the collapse of the convergence agenda, he warned.
EU to regulate credit agencies
Credit ratings agencies will be regulated by the EU, under proposals published by the European Commission. Internal markets commissioner Charlie McCreevy said the rules go further than those put forward in the US and elsewhere. Under the regulations, the ratings agencies would be prevented from having a conflict of interest between those who rely on the ratings and those who pay for them. Agencies would be required to maintain a vigilant approach to the quality of ratings methodology and they must operate transparently. They would be subject to close regulatory surveillance.
HMRC ‘ineffective against cash-in-hand’
HMRC is failing to tackle the cash-in-hand economy, says the House of Commons Public Accounts Committee. The committee believes £2bn is lost in tax a year, with about two million people operating in the informal economy. It says that HMRC’s detection rate is only about 1.4% and criticises the low level of penalties – typically only 3% of the detected tax lost. HMRC spents £41m a year encouraging people and businesses to operate within the formal economy.
CSR ‘needs more transparency’
More transparency is needed in environmental and social reporting says the FEE, the Federation of European Accountants. FEE believes that companies are failing to comply with the spirit of the amendments to Article 46 of the 2003 Modernisation Directive, which requires transparency on sustainability in companies’ annual reports. It is calling for the EU to take more action by supporting research into how best CSR information should be integrated into annual reports.
Funding of nations to be reviewed
A House of Lords committee will consider how the devolved nations are funded. The committee will contain some of the most powerful politicians sitting in the Lords, including Lawson, Richards and Trimble. There is growing resentment in England against the higher per capita public spending in other parts of the UK.
Practice news
Practice
PwC hits back at AIU
PwC has told the Audit Inspection Unit that it is wrong in its interpretation of ethical and auditing standards. AIU criticised PwC in its first detailed published report on the firm. PwC breached the principles – though not the rules – of the Audit Practice Board’s ethical standards, suggested AIU, by rewarding key audit partners not considered part of the audit team for the sale of non-audit services. PwC responded that that if AIU believes standards or rules need to change it should refer this to the Auditing Practices Board. AIU said that all of the seven large firms it was reporting on had conducted audits of high quality, but it raised a number of detailed concerns – including the evaluation of external experts on whose judgements the audits rely. AIU said that a “recurring theme” of KPMG’s audits was a lack of evidence underpinning key audit judgements.
Single EU audit rules urged
An FEE conference on audit regulation has been told that different auditing standards across Europe are creating additional burdens and costs for companies and auditors, and are confusing clients.
Wienand Schruff, chair of the global regulatory group at KPMG, complained that while there are common minimum standards across the EU, national regulators have their own additional rules.
News in the corporate sector
‘Bribery poses UK risk’
PwC has warned UK companies not to allow the economic downturn to tempt them into corrupt practices to win orders. The latest Bribe Payer’s Index from Transparency International shows the UK is improving ethical practices, moving up to equal fifth – with Germany and Japan – in its refusal to pay bribes to obtain contracts. But PwC is worried that businesses may be willing at present to win business at any price. Experienced staff who prevented companies from paying bribes may leave in the recession, potentially leaving companies more exposed to bad practice and facing legal action, says PwC. New proposals from the Law Commission – which advises the Government on law reform – would strengthen anti-corruption laws. Existing law would be replaced by two offences of bribery and of bribing a foreign public official. The change would require businesses to adopt a higher standard of conduct.
Credit insurance premiums rise sharply
Euler Hermes, the world’s largest credit insurer, has warned that premiums will rise on average by 20% to 25% in the current economic conditions. It predicts a 50% increase in business failures in 2009. The insurer expects to record a loss in the fourth quarter of 2008, following the collapse of Woolworth’s.
News from the financial services
Uncertainty remains over MCEV
There is continued uncertainty over whether, and how, market consistent embedded value will be applied to life assurers’ accounts. The CFO Forum – representing chief finance officers of European life assurers – has urged the IASB and FASB to delay the use of mark-to-market valuations on assets intended to be held until maturity. It is thought that some life assurers could have about a third of their profits wiped-out if their accounts are presented using MCEV, given the current state of the markets. But the Association of British Insurers, whose members include life assurers, opposes any ‘carve out’ from IFRS on fair value, concerned that insurers as investors need to obtain an accurate view of the value of companies. Stephen Haddrill, Director General of the ABI, told a hearing of the Treasury Select Committee that he supported fair value and opposed attempts by the European Commission to weaken the independence of the IASB.
Madoff questions
A small New York city accountancy firm, Friehling & Horowitz, has been revealed as the auditors of Bernard L. Madoff Investment Securities, whose assets have been frozen by the US Securities and Exchange Commission in connection with an alleged $50bn ‘Ponzi’ investment fraud. Madoff has been charged with fraud. Hedge fund advisors Aksia had previously told clients not to invest in Madoff because Friehling & Horowitz operate from a small New York office and, it reported, have just three members of staff.
Enterprise news
‘Urgent reform of small firms funding needed’
Reform of the Small Firms Loan Guarantee is urgently needed to give small businesses continued access to finance in the recession, says ACCA’s SME Committee. There should also be a tightening of the Code of Practice for Business Banking, concludes the policy paper Financing SMEs in the Recession. The SFLG scheme should be extended to strengthen SME supply chains and should cover older and bigger SMEs, larger loan amounts and shorter-term lending. This action would prevent the failure of one supplier or customer from infecting all SMEs dependent on it. The committee comprises representatives from the Federation of Small Businesses, Confederation of British Industry, British Chambers of Commerce, the Forum of Private Business and banks. The committee warns that too few small firms in financial difficulty are taking advice from accountants: businesses with access to accountants and financially qualified managers are more likely to secure the finance they need.
Councils set-up public banks
Local authorities are setting-up municipal banks to lend to small firms. A ‘Bank of Essex’ is being formed by Essex County Council, using European Investment Bank money, for small firms lending. A related community finance scheme, Foundation East, could make high risk loans. Birmingham City Council may create the ‘Bank of Birmingham’ to lend to local small firms and individuals.
Public sector news
Councils to get new fund-raising powers
Local authorities will be given the power to levy a supplementary business rate, if a published government Bill is passed by Parliament. County and unitary councils and the Greater London Authority would be able to raise funds for local economic development, subject to a formal consultation with business. But local government minister John Healey has told councils they are not using their existing wellbeing power effectively. He said that take-up so far has been weak and that authorities should use this more to get through the economic downturn. A report from the Audit Commission also said that councils should be using their powers more effectively. But it found that most authorities have sufficient reserves to weather the recession, despite the widespread potential losses on investments in Icelandic banks. It calculated the likely cost of the recession on council finances as about £2.5bn.
Scotland rejects PPPs
Scotland’s government has formed the Scottish Future Trust to develop a cheaper, not-for-profit, alternative to Public Private Partnerships and the Private Finance Initiative and provide an extra £150m a year into Scottish infrastructure. Its first chairman is merchant banker Sir Angus Grossart, a former vice chairman of RBS. SFT plans to launch a Scotland municipal bond to finance future projects.