The financial crisis has generated a philosophical debate about the role of accounting, notably the extent to which it is pro-cyclical, exacerbating booms and busts.

It is clear that the financial sector has been badly damaged by the crisis and the risks of similar costs to the public purse occurring again should be minimised. However, it is not clear that accounting has the potential to be a public policy tool to reduce pro-cyclicality, nor that it would be appropriate to use it in this way.