January 30, 2013 / 12:15 PM / 5 years ago

UK proposes tougher accounting test on banks' health

LONDON, Jan 30 (Reuters) - Accountants will have to determine more thoroughly if a bank can stand on its own two feet without taxpayer help for well over a year under draft changes put forward by Britain’s audit regulator on Wednesday.

The Financial Reporting Council (FRC) said auditors like KPMG, PwC, Deloitte and Ernst & Young would have to examine in-depth threats to a company’s business model and capital adequacy through the economic cycle for the sector a company is in.

The planned reform stems from anger among UK policymakers that auditors gave banks a clean bill of health just before taxpayers had to shore them up in the 2007-09 financial crisis.

Currently auditors only attest to a company as a “going concern” for the following 12 months, but an inquiry by Lord Sharman recommended a longer period and wider criteria.

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