Accounting boards: Spain's dynamic provisioning not the way forward

International accounting standard setters have warned that accounting for dynamic provisioning – rainy-day funds banks build up in good times to absorb losses in economic downturns – should not be recorded against profit and loss (P&L), as it is in Spain.

Speaking at the International Centre for Financial Regulation's inaugural summit in London on April 1, Ian Mackintosh, chairman of the UK Accounting Standards Board, stated his preference for establishing non-distributable reserves during economic upturns to achieve a counter-cyclical effect.

"The Spanish would like to take [the funding cushion] as a charge against P&L. We accounting standard setters, in general, don't think that's such a good idea," said Mackintosh.

"There are others ways you can