Commentary: How accounting information is used by the South African Bank Regulator

L Bakoro, P de Jager and S Parsons

South African Journal of Accounting Research, 2013, vol. 27, issue 1, 181-203

Abstract: Fair value accounting has been named by some as a role-player in the recent financial crisis. The initial defensive argument that accounting is only a messenger is easily dispelled by considering its vital role in banking and bank supervision, as well as its real-world implications. Yet, a second argument deserving further scrutiny states that prudential filters under the Basel Accords neutralise most fair value accounting gains and losses, which limits this source of volatility. Using South Africa as a representative case, this study compares evidence from (1) a questionnaire, (2) a key informant interview and (3) regulatory publications to investigate the use of accounting information in bank supervision, and to test whether all fair value gains and losses are, in fact, neutralised. This study found that fair value gains and losses through profit and loss (under IAS 39 (2010)) have not been neutralised by the South African regulator in its application of the Basel II framework since January 2008. A strong disconnect between the need for prudent information by regulators and the neutral information provided by accounting is also identified. Significantly, the results of this study dispel a core argument which so far has helped to shield fair value accounting from blame, but the importance is tempered by the fact that only South African evidence was considered.

Date: 2013
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/10291954.2013.11435175 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:rsarxx:v:27:y:2013:i:1:p:181-203

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/rsar20

DOI: 10.1080/10291954.2013.11435175

Access Statistics for this article

South African Journal of Accounting Research is currently edited by Soon Nel

More articles in South African Journal of Accounting Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().