FirstGroup under fire over accounting methods
Transport company accused of overstating annual profits
Transport group FirstGroup has come
under attack over claims that it has overstated its annual profits by millions
of pounds by using unusual accounting practices.
MPs on the
Public
Accounts Committee have taken an interest in its accounting methods after it
became known that it reports regular business expenses, including train
refurbishment and legal and professional fees related to its bids for train
franchises, as exceptional or ‘nonrecurring’ items.
It is the only British rail company to follow this practice, which this
year, led to the exclusion of £19.3m of ‘nonrecurring bid costs’ and a further
£22.3m of other ‘nonrecurring items’ from its operating costs,
The
Times reported.
Stripping out this figure would cut FirstGroup’s reported 2006 operating
profits by 12%. The Times said.
John Pugh, PAC member, slammed the practice and said it brought ‘no credit on
them or the industry’. He called for rail companies to adopt industry-wide
reporting standards.
FirstGroup defended its methods and said in a statement that its results were
reported in line with international accounting standards.
Further reading:
Spotlight: Alarms ring at First Group
