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SocGen: rogue trader plus rogue accounting?
En France ce weekend and the press is full of the euro4.9bn fraud at Societe General. Astonishing that another rogue trader should appear in the form of Jerome Kerviel, SocGen's estwhile trader, especially given that the world thought that this sort of thing was behind us after Nick Leeson's escapades at Barings.
But while financial regulators ponder just how his deteriorating position was never spotted by the checks and balances that should have been watching him like a hawk, the much more arcane but crucial question of how you account for these things has already begun to surface.
In short did SocGen follow established accounting rules by shoving all the losses in the accounts for 2007, or should they have been on the books for 2008, the year in which the losses were made?
This one will have the accounting experts rubbing their heads for months to come, especilly in France where their is a lot of public support for IFRS, but even more private chagrin over the matter.
Still, as we say in the press, this one will run and run.
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