Mr. Cormac Butler:

The Senator is correct in that regard. There are two legal opinions, one from George Bompas and one from Martin Moore. George Bompas certainly links true and fair to prudence, and that broadly means that one can never overvalue a loan. If one expects to recover €300,000, even though one has lent €1 million, the true and fair value is €300,000. It is not €1 million. Martin Moore appears to have reached a similar conclusion, but he does so reluctantly and using very opaque English because he gave his legal opinion on behalf of the accounting standards board. At paragraph 71 of the opinion he claims that prudence is an essential ingredient of true and fair view, which means that the Senator's argument that loans must be shown at the lower of what one advances the loan for or what one can recover is correct. The Oireachtas banking inquiry heard evidence from the accounting profession and from banks that by law they were forced to delay the recognition of losses. That is incorrect. George Bompas disagrees with it and Martin Moore looks as though he disagrees with it. The recent AssetCo case, however, confirms that the Senator's analysis is correct. The report entitled The Future of Audit, which I recommend that members read, also confirms that the Senator's view is correct and that the accounting profession has given incorrect advice on this matter.