www.managementconsultancy.co.uk/accountancyage/analysis -
[Cached Version]
Published on: 11/15/2007
Last Visited: 11/15/2007
,I'm tempted to say everybody,' says Ken Wild of Deloitte.
Wild says that whichever accounts preparer you ask will give you a different answer as to how profits should be recorded.
,People say you shouldn't include finance costs, because it goes up or down with interest rates.But others say that's an ongoing cost,' he says.
...
Wild has a tale, though, about the markets that would make most a little wary of trusting the analysts and investors too much.
A retailer 15 years ago had a £90m charge to put through its books after buying a rival.
But instead of putting it in as an extraordinary item it put it through the profit and loss account, saying that as it planned to make more acquisitions it would be a recurring cost.
,The shares fell 35p, a big chunk of their price, and the whole of the retail sector was marked down.Lex [the FT investment column] said there were fears of an outbreak of prudent accounting,' Wild says.