UBS banking analyst Jonathan Mott has challenged the major banks' overuse of below-the-line items in their financial reports, arguing that the practice overstates their earnings' performance.The banks make adjustments to their statutory net profit, taking items below the line and referring to residual cash earnings as their main metric. The cash earnings are then used as the basis for calculating earnings per share, dividends and, in some cases, management remuneration. Mott said: "We have generally agreed with the exclusion of 'accounting noise' items, such as hedge ineffectiveness adjustments, but we are concerned with the recurrence of so-called 'one-off' items."These one-offs include restructuring charges, integration provisions, tax settlements, legal settlements, asset write-downs and gains on sales.Among the Big Four banks, restructuring provisions have been itemised as one-offs in 12 of the 15 years since 1997, adding up to $4.5 billion.Asset write-downs have been reported below the line in eight of the 15 years, adding up to $1.6 billion. Integration and due diligence expenses have been reported nine times; these add up to $2.1 billion.When added back in, net below-the-line losses amount to $7.1 billion after tax, or 3.7 per cent of net profit over a 15-year period.NAB is the biggest offender, with below the line items worth 8.2 per cent of net profits over the past 15 years. ANZ's below the line items have been worth 2.4 per cent of net profit over the same period, Commonwealth Bank's have been worth 2.2 per cent.Westpac is in the unusual position of having itemised more gains than losses as one-offs over the 15 years that UBS investigated.Mott said: "Boards and auditors have a tendency to allow more expense and loss items to be taken below the line than revenue and profit items."This becomes significant over time, leading to an overstatement of delivered earnings and return on equity, and, potentially, an overpayment of dividends and management remuneration."The report poses the question of whether banks should be able to take integration charges, for example, below the line, while the subsequent benefits are taken above the line."Overall, we believe that these integrations are generally one-off in nature, although banks do remain acquisitive over time." Mott said."However, we believe that the cost of integration should be factored into the acquisition price in calculating the effective multiple paid for assets."For example, in July 2009, NAB disclosed that it had paid approximately $99 million to acquire 80.1 per cent of JB Were. Although earnings' multiples were not disclosed, this appeared to be a fair price. However, over the subsequent five halves, NAB spent $138 million integrating JB Were into NAB Wealth. This effectively doubled the price that NAB paid for the business.Mott said that another category that had attracted a lot of attention from investors was IT impairment."Companies make significant investments in IT software, hardware and e-commerce, which are usually capitalised on the balance sheet, only to be written down or written off below the line before the project is completed."On a number of occasions these ventures were never