The 2009 European fraud survey cautions against the manipulation of asset impairment writedowns due to the subjective factors used and judgment needed to draw conclusions about the proper amount of write-downs. The survey noted particularly high levels of asset write-downs in the banking and investment management sectors.

a. Why do you think the banking and investment management sectors may have been especially affected by write-downs during the time period leading up to the 2009 survey?

b. Explain how write-downs might affect income in the year of the write-down and subsequent years.