The most recent articles from Accountancy Age

London Scottish Bank collapses

David Jetuah — 2008-12-01T17:02:00.000Z

David Jetuah, Accountancy Age, Monday 1 December 2008 at 17:02:00

Maggie Mills, Tom Jack, Simon Allport and Tom Burton handling affairs at the collapsed bank

Partners from Ernst & Young have been called in to take over at London Scottish Bank after it went into administration.

Tom Burton, Maggie Mills, Tom Jack, Simon Allport and are now managing the affairs, business and property troubled bank, which specialises in customers with poor credit histories.

However, the directors and existing management structure will remain in place and the directors and their existing management team will be responsible for the day-to-day operations.

Tom Burt said in a statement :

'The company has not ceased to trade. The administration is necessary because of the company’s financial position and to ensure that it can continue to operate, and to ensure the best interests of customers and creditors are served.'

The purpose of the Administration Order is to seek to ensure the best long term solution can be adopted for customers and creditors, and whilst doing so, continuing the operations of the company.'

We will be working closely with management and do not envisage any major changes to procedures on a day-to-day basis. Our key objective is to stabilize the underlying businesses.'

Johnson takes CFO post at Fannie Mae

Rachael Singh — 2008-12-01T11:37:00.000Z

Rachael Singh, Accountancy Age, Monday 1 December 2008 at 11:37:00

David Johnson takes finance chief role at Fannie Mae

The troubled mortgage lender which had to be bailed out by the American government earlier this year has taken on David Johnson as its chief financial officer CFO.com reported.

Johnson will be the third CFO at Fannie Mae in the space of a year. He joins from Hartford Financial Services, the providers of personal insurance and financial products.

Prior to Hartford he was CFO at business and consumer services provider Cendant.

Within months of Johnson joining Cendant, the company was embroiled in a financial scandal. It had merged with CUC International and according to Johnson, CUC had 'turned out to be run by criminals.'

Johnson was also CFO at Hartford when it was involved in a major scandal in 2006 which last year saw the attorney general announce that Hartford had agreed to pay $115m to settle claims made by Connecticut, Illinois and New York - that it faked bids and allowed illegal trading in certain mutual funds.

Lenders to stay stingy for another year, warn CFOs

David Jetuah — 2008-12-01T09:35:00.000Z

David Jetuah, Accountancy Age, Monday 1 December 2008 at 09:35:00

Finance chiefs in the United States say that relationships with banks will stay frosty until the end of next year

US CFOs have said that banks reluctance to lend to comapnies will not lift until the end of next year.

Finance bosses also thought the US government's $700bn bail out plan was not guaranteed to stimulate the banks into lending to their clients.

The poll by CFO.com found that the US Treasury's investment in banks would need to have conditions attached to ensure the money filtered its way into company coffers: 'Otherwise, I believe the money will mostly used to increase reserves.'

Rentokil brings in Murray as CFO

David Jetuah — 2008-11-28T14:39:00.000Z

David Jetuah, Accountancy Age, Friday 28 November 2008 at 14:39:00

Murray waiting in the wings to take over as finance director of pest control heavyweight in the New Year

Michael Murray has been appointed as Rentokil's CFO-in-waiting, replacing Andrew Macfarlane.

Murray will officially become a director and CFO of the pest control giant from 5 January 2009 and Macfarlane will stay on for a period to ensure a smooth handover.

News of Macfarlane's departure came a surprise to investors because no mention was made of it when chief executive Alan Brown delivered a third quarter results presentation earlier this month, which detailed a 73% drop in Q3 profits.

Alan Brown said: 'I am delighted that Michael Murray will be joining the company. Michael's operational skills and experience will make a significant contribution to Rentokil Initial's Operational Excellence agenda.'

Murray joins from GSL, a private equity owned support services company, recently acquired by G4S. Prior to that was chief financial officer of TNT Express, TNT's global express parcels division.

Audit committees warned to ask 'key questions' in the crisis

Gavin Hinks — 2008-11-28T08:59:00.000Z

Gavin Hinks, Accountancy Age, Friday 28 November 2008 at 08:59:00

'More rigour' necessary in considering analysis for going concern statements

Audit committees have been offered new guidance warning them to consider 'key questions' when looking at annual financial statements in the financial crisis.

The guidance, which reiterates existing requirements, says that 'particularly relevant in current economic conditions' is monitoring the integrity of the financial statements and formal statements about company performance and reviewing internal controls and risk assessments.

A set of key issues laid out by the FRC including close attention to liquidity risk and going concern considerations.

The paper says: 'Audit committees are likely to examine in more detail the rigour with which the analysis supporting the going concern judgment has been made and the integrity of the disclosures about going concern in the financial statements and other market communications.'

Ian Wright, FRC Director of Corporate Reporting, said the 'initiative is the latest in a series of actions taken by the FRC and its operating bodies during 2007 and 2008 to help mitigate the increased risk of errors and omissions in annual reports which have the potential to adversely affect confidence in corporate reporting. We will continue to monitor developing issues and will be seeking to help the market whenever possible.'

Profile: Andrew Higginson, CEO of Tesco Personal Finance

Melanie Stern — 2008-11-27T19:10:00.000Z

Melanie Stern, Accountancy Age, Thursday 27 November 2008 at 19:10:00

He’s spent more than a decade at the top of the Tesco Finance tree – but it doesn’t stop there for Andrew Higginson. He tells Melanie Stern about adding a CEO role to his portfolio

Not content with running the finances behind the UK’s number one supermarket, Andy Higginson is currently engaged in not one, but three jobs. This year marks his eleventh year as group finance and strategy director for Tesco and his tenth year as chairman of Tesco Personal Finance (TPF). But he is only into his first one hundred days as chief executive officer of Tesco Retailing Services.

And he’s doing it all with a hangover on the morning after a group-wide office party the company holds every couple of years, when we meet him at Tesco’s Cheshunt headquarters.

Must have been a good bash: Tesco’s interim results showed that in the year of the credit crunch, the grocer notched up an 11.3% increase in pre-tax profits to £1.4bn, on sales of £25.6bn, up 13.8%, in the 26 heady weeks to late August.

Analysts overwhelmingly rated Tesco stock a buy or hold, a rare haven in a market all but officially certified insane since late summer.

Higginson’s latest job is a newly-created one heading up a newly-created business unit, so there is no in-tray awaiting inheritance. And despite announcing his move to the role in July, the board has only just briefed headhunters in the search for a successor to the FD throne (there are a handful of internal hopefuls, too). But he’s itching to get stuck in.

‘I’m trying to do both my old job and the new job at the moment, which is not ideal and, of course, the FD job is pretty busy right now with everything that’s going on in the financial markets,’ says Higginson. ‘But from my point of view the sooner they sort it the better, because I am quite enthusiastic about the new job.’

At any rate, the job can’t really be gotten on with in earnest until Tesco receives the Financial Services Authority’s approval for its £950m buyout of Royal Bank of Scotland’s 50% stake in TPF, which encompasses its internet business and its telecoms activities, as well as a platter of loans, insurance offerings, savings accounts and a credit card. Higginson wants to add mortgages and a current account to that arsenal.

The FSA verdict should be in shortly, Higginson hopes. This deal will form the backbone of the retailing services strategy - broadly, to be as strong in non-food as the group is in food, the former deemed the key driver of Tesco’s future growth.

The timing of the RBS buyout compared to the subsequent near-collapse of most of the UK’s retail banks raises an eyebrow. Time needed to set up the relevant processes and systems notwithstanding, the current environment could hardly be better for the launch of Tesco Bank: not only have consumers lost faith in the incumbent system, many of Tesco’s would-be high street rivals are now at their weakest. There could be a lot of valuable debris for Higginson to sweep up over the coming months and years from the mess the UK banking system is in, and Tesco has the brand recognition, geographical coverage and trusting consumer relationship to turn that into profit.

Was it serendipity or insider knowledge that precipitated the deal? ‘We certainly weren’t suspecting the market conditions we’re seeing now when we decided on the purchase,’ rebuffs Higginson.

‘With the benefit of hindsight, I can see now that RBS was thinking about the need to raise some cash, and their price aspirations were quite different to ours. But the original idea [CEO] Terry [Leahy] and I had was just to grow the business in the way it had not done for about three years.

‘The conversation we had in early 2007 was how to kick-start it. We thought TPF had to become more important to either RBS or us - but as it had our name over the door it probably had to be us because we weren’t willing to give our brand to anyone else.’

Double whammy

Higginson’s ambitious two-pronged mandate is to create a full-service, retail bank to rival the high street and, in doing so, drive TPF’s existing £400m profits to £1bn annually. To put that in context, group operating profit for the year ended February 2008 was £2.8bn; he expects 2008-09 full-year profits of ‘anything up to £3bn’.

At present, TPF has around five million customer accounts, but Tesco has 14 million Clubcard members (‘active users’ as they call them) and detailed data on the spending habits of every one, which gives Higginson an untapped - and, even better, captive - market to which he can roll-out a financial products platter behind one of the UK’s best known brands. ‘The truth is we have a collection of individual products at the moment, a lot of one-year products like car insurance and there is no real stickiness to these transactions. A Tesco current account would be a way for us to build a true relationship with our customers. It’s a terrific opportunity.’

It’s no surprise to hear Higginson is juggling three titles, given his propensity for mucking in: if anyone was looking for the ‘x’ factor that made him the man for one of the UK’s meatiest FD jobs, it must be his attitude to being operationally and commercially aware. It was also a key element in winning the Accountancy Age outstanding industry contribution award in 2006. His 18 years as a UK plc FD, first with Laura Ashley, Burton Group and then Tesco, have put him at the centre of everything from international business to acquisitions, bank covenant defaults and crisis management. It’s not a bad turnout for a Lancashire lad with a 2:1 in town and country planning from Birmingham Polytechnic - and who seems distinctly turned off by the whole idea of being an accountant.

Aspirations fulfilled

‘I’ve served my time,’ he quips when asked if his new role signals a permanent goodbye to the finance function. ‘My aspirations were always to move into general management and I’ve gradually done that at Tesco, so this is a chance to go full-time into building a really good business. It’s a portfolio role and I’ve got this very talented team, so I’m very excited.

‘I never had an interest in pure accounting - it was just a means to an end really. My aim was to be involved in running a business, and my view as a student was, “Those accountants seem pretty involved so why don’t I do that?” I never worked in the profession because I never wanted to be an accountant. I wanted a job in business and finance was my route in,’ he says.

‘My internal debate when I was offered the Tesco job was not “Do I want to be FD of Tesco, or do I want to be FD of Burton Group?” - that was obvious because Tesco is massive in comparison. The debate was whether I wanted another FD job at all. Did I not want to look around for a chief executive role?’ he recalls asking himself after four years with the then-listed fashion retailer. But Terry persuaded me at the time that he could fulfil those aspirations at Tesco. I’m very glad he did because I’ve loved every minute of it.’

It’s a great time to be taking on a CEO job of this kind in the UK grocery market. Few of the numbers Tesco has reported in the past 12 months have pointed south and CEO Leahy has adopted the mantra that ‘Tesco is at its best in tough markets’. Well, he would say that. But he could be proven irritatingly right in the next 12 to 24 months as Higginson takes the helm at TPF, if he can take advantage of the opportunities likely to be afforded by the failing UK retail banking sector and leverage the deep knowledge he brings from the FD role in going head-to-head with well-established banking brands at the rival grocers (only Morrisons remains outside this business line, save for its credit card product).

Higginson believes the current consolidation and nationalisation of banks in the UK will create a clutch of behemoths that will not be able to resist the temptation to squeeze margins upwards and Tesco will cash in simply by branding itself as a traditional cautious bank, ‘well-run, trusted’ - ah, those quaint, vintage concepts.

‘I can’t think of a better time to do it, really,’ he says. ‘Building a business is going to be the most exciting part. The technical aspects of learning about banking is something I will have to do, as I did with IFRS or pensions, for example, because I am not a technical accountant - but the exciting stuff is learning how to connect with customers, how to use the fact that they trust Tesco to persuade them to think of us in financial services... and figuring out how we can make money from it.

‘How can we offer these services without blowing our brains out on margins?’

The effectiveness of Higginson and Leahy as a double act, whether you view Tesco as an evil capitalist mothership with unbridled power over shoppers and regulators alike, or as a triumph of Britain’s canniest business talent, is history. Should we be taking bets on how long it will be until we hear that Higginson has bumped Sir Terry out of the hotseat? ‘No, I don’t think so,’ he says after a pause. ‘Terry’s still got loads of energy and he’s one of those exceptional leaders you get once in a generation. He is younger than he looks, you know.’

Perhaps that’s a tad premature. For now Higginson just wants to warm his own seat. ‘The thing that really excites me about the job is, at my age, with all my experience, I’m still young enough to have a fair bit of energy, but I’m old enough to have loads of experience. I’m the most potent as a businessman than I have been; I can make a difference. Now just seems a natural time for me to step up.’

Past its sell-by date

Tesco’s Andrew Higginson thinks the beancounter analogy is well past its sell-by date. ‘I don’t believe in the idea of the plain vanilla FD job; a pure finance role is pretty unusual these days,’ he says. ‘Some people are more technical, but I am more commercial and I see myself as just another member of the board who happens to come from the finance side.’

He adds that his career was always rooted in real business - first as a graduate trainee auditor at Unilever in 1980, where his department was referred to by everyone else as ‘commercial’ - followed by a stint as a commercial manager for Lever Brothers in Hong Kong. Moving to Tesco 11 years later, he recalls joining Leahy, who was appointed Tesco chief executive a fortnight before Higginson joined, and former deputy chairman David Reed to make an informal ‘strategy committee’ - but when Reed retired in 2004 and went non-executive, Higginson absorbed his role on that informal committee, giving him even more non-finance strategy scope.

Check out the award

Higginson scooped the Accountancy Age 2006 award for outstanding industry contribution.

Asked at the time how Tesco and its FD stay ahead of the competition, he said: ‘We stay paranoid! We have to assume that they’re all out to get us, so we try to do a bit better than all of them. I don’t mean to sound glib, but I think our motto, “every little helps”, is the best way to explain it.

‘There’s no eureka factor. We work on much the same economics as everyone else in this business in terms of land, labour and logistics costs, and we’re all selling the same gear. What we do is add a little bit extra: things such as making parking a bit simpler, making sure that our prices are a bit lower and the queues are a bit shorter.

All these things combine to create the right kind of shopping experience. This is how we will continue to differentiate ourselves from the competition.’

Curriculum vitae

Name: Andrew Higginson

Age: 50

Qualification: FCMA

Chairmanships: Tesco Personal Finance

Non-executive, independent directorships: BskyB

Member of The Hundred Group of Finance Directors

Career

1997- Group finance and strategy director, Tesco plc

1994-97 Group finance director, The Burton Group plc

1990-94 Finance director, Laura Ashley Holdings plc

1987-90 Finance director, Guinness Brewing International

1986-87 Controller, Guinness Overseas (Brewing) Ltd

1984-86 Commercial manager, Lever Brothers China Ltd

1980-84 Internal Auditor, UCMDS Graduate Entry Scheme, Unilever plc

On the money with Gavin Hinks

Gavin Hinks — 2008-11-27T18:50:00.000Z

Gavin Hinks, Accountancy Age, Thursday 27 November 2008 at 18:50:00

The old going concern warnings are starting to come in. But the issue seems to have reversed itself, as so much has in recent weeks and months as the credit crisis does its damage

The previous problem was that auditors were too afraid to issue going concern statements because the statement itself could trigger the collapse of the company.

And who would want to be responsible for that if someone could claim later that there was a viable rescue option if only the auditors had held off on the statement.

Now, however, the outlook is different. As the crisis deepens there are warnings to look out for more going concern statements as auditors stick hard to the rules and take fewer risks up front. At least they can say they warned everyone.

Of course, that’s the criticism of auditors in relation to the critical problems faced by UK banks that they didn’t wave the red flag early enough.

Looking at the current warnings, it’s not implausible to argue that sensitivity over banks has spilled over into auditors working in the broader economy pushing them into thinking they must issue the going concern statements.

The difficulty is that the old problem still persists. Going concern statements still run the risk of bringing about the end of things for a business.

Oddly though, despite everyone being strapped for cash, it’s possible to discern a stigma developing against calling time on a business especially by a bank.

Ironically it was only this week that the Financial Reporting Council consultation on directors’ going concern statements was closed.

It had launched a review ostensibly to consider whether changes were needed given the current climate.

The FRC was probably never more right in that.

Gavin Hinks is editor of Accountancy Age

This week's blogs: deep in debt

various — 2008-11-27T18:44:00.000Z

various, Accountancy Age, Thursday 27 November 2008 at 18:44:00

This week our bloggers make flying visits to the G20 summit and the O2 Arena

The Declaration from [the] G20 summit in Washington and, in particular, paragraphs 3 & 4 setting out the ‘root causes of the current crisis’, makes no mention of accounting issues, problems with fair value or anything similar.

The leaders of the G20 stated the crisis arose because ‘market participants sought higher yields without an adequate appreciation of the risks and failed to exercise proper due diligence. At the same time, weak underwriting standards, unsound risk management practices, complex and opaque financial products and excessive leverage combined to create vulnerabilities in the system.’

It’s a victory for common sense and an opportunity to contribute.

Jeremy Newman, CEO, BDO Intl blog.e-bdo.com

I’ve heard of major retailers seeking to stretch credit terms to 90, 120, even 180 days. Even large suppliers face huge difficulty financing debt books like that. As for smaller suppliers, squeezed by their bank managers all the while, providing credit on such terms is impossible.

Perhaps it’s time more businesses adopted the Late Payment of Commercial Debts Act 1998, as amended. The regulations entitle a supplier to charge 8% over base on late payments.

The definition of late payments makes interesting reading. Basically, 30 days is the accepted credit period, even if you’ve no agreed credit terms with your business customers.

And, if your customer forced you to sign up to longer terms or to accept late settlement interest at significantly lower rates, those elements of your contract will be voided by the courts.

Peter Rogol, partner, Goodman Jones www.goodmanjones.net

The timing and choice of venue for the Lehman Brothers’ administration meeting last week raised an eyebrow round these parts.

PricewaterhouseCoopers administrators chose the 02 Arena in London Docklands to warn creditors that the job was ‘10 times as big and as complicated as the unwinding of Enron’ and warned some that they would lose money.

As many as 1,000 creditors attended. With that many turning up, presumably it was the main

hall that was used and not the PwC box.

More entertainingly the meeting bisected a two-night Leonard Cohen residency at the same venue.

At this point I think I’ll leave you to insert your own punchline about which was the more miserable event.

Damian Wild, editor-in-chief and publisher, Accountancy Age accountancymatters.accountancyage.com

'Fair value is not fair'

Russell Berman — 2008-11-27T18:10:00.000Z

Russell Berman, Accountancy Age, Thursday 27 November 2008 at 18:10:00

Wayne Abernathy, the US bankers’ regulatory chief, tells Russell Berman, in Washington DC, that fair value has fanned the flames of the economic crisis

As policymakers in Washington DC and in capitals worldwide contemplate changes in accounting standards to stem the financial meltdown, one of the men leading the charge against fair value is Wayne Abernathy.

He is the executive vice president for financial and regulatory affairs at the American Bankers Association, an influential trade group that for years has railed against fair value or mark-to-market accounting.

The fair value rule has been at the centre of debate over financial regulation, with the US Securities and Exchange Commission looking at whether to overhaul a system ushered in more than a decade ago.

Critics claim it has sped the downward spiral of the financial system by forcing banks and other firms to value assets at a market rate even when little or no market exists.

The subsequent write-downs have blown up balance sheets, forcing banks to sell more assets

to raise capital and scared off potential buyers.

Fighting fires

In an interview last week with Accountancy Age, Abernathy likened the financial crisis to a house fire mark-to-market rules may not have been the root cause, but it helped it spread to the upper floors. ‘It is an accelerant,’ he explained. ‘It didn’t light the fire, but it made it of huge consequences.’

Abernathy, a former assistant treasury secretary in the Bush administration, argues that mark-to-market reporting distorts the value of assets that were not acquired for the purpose of reselling. This puts banks in particular at a distinct disadvantage. ‘Most of the kinds of loans that banks make, mark-to-market doesn’t apply,’ he said.

Abernathy offered a grim prognosis for the economy if fair value rules are not rewritten. He predicted that the global financial meltdown would ‘continue the spiral until the market finally reaches a false bottom’. He blamed fair value not only for the current financial woes but also for exacerbating the dot com bubble of the late 1990s and the housing bubble more recently.

Mark-to-market accounting, he said, inflates prices during an upswing and vastly understates them during a downturn.

He pointed to the wild swings in the energy sector, where oil prices hit record highs over the summer but have dropped precipitously since.

‘People a year ago were saying why does the price of energy keep going up? Because mark-to-market makes it look good,’ he said.

‘If you look at energy companies, they’re now having to book very good assets below what their

actual value is.’

Speaking calmly but confidently as he sat in his eighth floor office in the capital’s downtown district, Abernathy cuts an image of a university professor, as he outlines his argument in an increasingly controversial debate that goes to the heart of business.

Top firms have staunchly defended the fair value system, saying criticism of the reporting rules is misplaced and akin to blaming the messenger for the risky loans and management decisions that underlie the crisis.

Getting rid of mark-to-market rules, they argue, would make accounts opaque and allow companies to mask the bad assets that are weighing down their books.

Fair’s fair

Abernathy acknowledges the push against fair value is an uphill fight, starting with public relations. ‘I will admit they have won the rhetorical battle by calling their model fair value,’ he said with a laugh. ‘I remember reading something recently where one of the accountants is saying, “So you’re in favour of unfair value!” Our point of view is that fair value is not fair.’

He also sought to turn the argument for transparency on its head. ‘You’re transparently looking at the wrong thing,’ he said. ‘Just because the window is clear doesn’t mean you’re looking at the right place. You’re not looking at the real value. You’re transparently looking at what you could sell those assets for in the marketplace. But that’s not the real value of those assets.’

Assets, he said, should be valued based on how they perform their intended function, and not the price they would sell for on a given day. Take a loan for a restaurant, for example. If the purpose of the loan is to make a profit on interest payments, and not on reselling the loan, then the value of the loan should be determined based on whether the borrower is meeting the terms of the contract and not on the hypothetical price that a firm could get for selling the loan, particularly if the market is distressed. ‘It’s still performing as advertised. Why should I pretend it’s half the value that it was?’ Abernathy asked.

The ABA is pushing regulators to adopt a ‘mixed model’ approach that would keep fair value accounting rules for financial instruments that are traded in the marketplace or for entities whose business models are based on fair value, but eliminate the requirements for other assets. The SEC has been studying the issue and held a public roundtable last week in Washington, the second such forum it has held in a month.

Road to recovery

Abernathy said he does not know what impact the incoming Obama administration might have on the fair value debate, adding that he did not hear the issue discussed during the presidential campaign. ‘I don’t see a Republican-Democrat divide over the issue of accounting standards. I think that’s good,’ he said.

‘I think it will help the economy if we get it right, and I think it has hurt the economy dramatically by getting it wrong.

‘If we don’t solve this problem, we’ll continue to have boom-bust cycles, and they’ll accelerate.’

He did voice optimism that regulators across the globe were recognising that the question of mark-to-market rules needs to be addressed and he praised a decision last month by the International Accounting Standards Board (IASB) to ease fair value requirements.

The SEC had announced a similar move, but the ABA said the interpretation by the US Financial Accounting Standards Board hamstrung banks.

The bankers association has been generally supportive of efforts at convergence through international financial reporting standards, but has raised a number of concerns about how the shift would be implemented, specifically whether the move would be required or optional.

Fannie Mae appoints third FD this year

AccountancyAge.com — 2008-11-27T11:29:00.000Z

AccountancyAge.com, Accountancy Age, Thursday 27 November 2008 at 11:29:00

Fannie Mae, the US mortgage giant that was recently bailed out by the US government, has appointed its third finance director this year.

Fannie Mae, the US mortgage giant that was recently bailed out by the US government, has appointed its third finance director this year.

David Johnson will serve the company's executive vice president and CFO, effective immediately.

Johnson will serve in a broadened role as chief financial officer, the company said. In August, Stephen Swad left the company, and was replaced by David Hisey, who had been Fannie's senior vice president and controller.

Johnson was previously executive vice president and finance chief at Hartford Financial Services Group, a company he joined in 2001 and resigned from earlier this year. Prior to Hartford, he had been CFO at Cendant Corp., which he had helped take public earlier in his career, when he was an investment banker at Merrill Lynch.

Read the full story:

Fannie Mae Taps CFO: Former Hartford Finance Chief David Johnson

Umbrella companies' travel relief untouched

Kevin Reed — 2008-11-27T00:45:00.000Z

Kevin Reed, Accountancy Age, Thursday 27 November 2008 at 00:45:00

Taxman to hold off on plans to change the rules by which temp workers using 'umbrella companies' can claim tax relief on travel expenses

Workers operating within ‘umbrella companies’ will still be able to claim tax relief on travel expenses after the government decided against a clampdown.

The taxman has decided to hold off on plans to change the rules by which temporary workers using umbrella company structures claim tax relief on travel expenses. But HM Revenue & Customs will ‘refocus’ its efforts on the area to ensure compliance. If this does not improve, HMRC will revisit rule change plans at a later date.

Anne Redston, visiting professor at Kings College, London, said changing the rules would have been a ‘step too far’ for HMRC. ‘It would be too difficult to identify an umbrella company.’

In an earlier consultation document the Treasury said there was currently £300m tax relief for travel claimed each year.

But Redston said it was unclear how much of that was avoidance and poor compliance.

Overview: Easyjet's former chairman questions its accounts

Judith Tydd — 2008-11-26T19:21:00.000Z

Judith Tydd, Accountancy Age, Wednesday 26 November 2008 at 19:21:00

Prospects: why is Sir Stelios refusing to sign off the books at Easyjet

We’ve all heard of auditors qualifying the accounts, but a former chairman?

Sir Stelios Haji-Ioannou, now a non-executive director of easyJet is refusing to sign off its numbers. Despite only holding a NED role these days, he still owns a substantial stake in the airline.

Sir Stelios is feeling a bit queasy about the company’s taking-off and landing slot accounting. And there are no easy answers here.

What's happened?

A refusal by a company director-even a non-executive one-to sign off the accounts is almost unheard of.

‘It is quite unusual. Under normal situations if a director is unhappy or unsatisfied with accounts they would resign rather than sign-off. [Sir] Stelios is still a major shareholder in the company, so he is not simply going to give up,’ said Neil Mirchandani, partner at Lovells.

Sir Stelios’ astonishing move reflects a boardroom row, as he tries to get two non-executives of his choosing appointed to the board.

The move is even pitting him against the company’s auditors, PricewaterhouseCoopers, who signed off the numbers.

Sir Stelios said he did not agree with the accounting for the acquisition of GB Airways.

The airlines landing and taking off slots at Gatwick were, according to easyJet’s founder, too generously accounted for.

‘Given the fact that many airlines have already ceased operating from Gatwick I believe that slots will be freely available and hence it will be more prudent not to create Gatwick slots as an “intangible asset” on our own balance sheet this year,’ said Sir Stelios. the airline valued the slots at £72.4m.

Airlines have only recently started to value landing and taking off slots on their books, but when they began, with bmi an early adopter, nobody predicted that they would provoke such a row.

What's going to happen?

The stand-off is continuing. easyJet’s share price plummeted in the wake of the revelations, down 35p or 12.8% by the early afternoon after the announcement was made.

Overall, the numbers are not too bad. easyJet’s interim results for the six months to 31 March 2008 revealed strong revenue growth.

Total revenue grew by 24% to £892.2m with underlying pre-tax margin in line with expectations. Passenger numbers also increased 15% to 18.9m.

But the prospects, with jet fuel prices still relatively high, and cost pressures at Gatwick, it could be tough for Sir Stelios’ company. Uneasy times.

Breaking news: Deloitte appointed administrator to Woolworths

Damian Wild — 2008-11-26T17:35:00.000Z

Damian Wild, Accountancy Age, Wednesday 26 November 2008 at 17:35:00

High street stalwart joins MFI as latest victim of slowdown

Woolworths’ board is due to confirm it will enter administration at a meeting at 6pm this evening with Deloitte expected to be appointed administrators, the BBC has reported.

The Big Four firm will be appointed as administrator to the store chain and also to Entertainment UK, which supplies books and DVDs to supermarket groups.

The news followed confimation earlier this evening that DIY retailer had also entered administration, which will be handled by mid-tier firm MCR.

Woolworths' shares were suspended this morning and despite the intervention of business secretary Peter Mandelson, BBC business editor Robert Peston has said that today’s efforts to deal with its £385m of debt were unsuccessful.

‘Woolworths joint venture with the BBC, 2 Entertain, will not go into administration. It is owned by Woolworths' parent company, which will not go into administration,’ the BBC reports.

The collapse is likely to lead to the closure of hundreds of stores across the UK and will put tens of thousands of jobs under threat.

New Northern Foods FD spends 100k on shares

Kevin Reed — 2008-11-24T10:00:00.000Z

Kevin Reed, Accountancy Age, Monday 24 November 2008 at 10:00:00

New FD Booker invests in Northern Foods

The new finance chief of Northern Foods has bought £100,000 of shares in the business.

Andrew Booker purchased 200,000 chares at 53.69p, a month into his tenure as group FD after replacing Jez Maiden.

The Goodfella's Pizza and MacDougall's pastry owner recently announced a 6.8% rise in interim revenues to £468.6m to 27 September.

However profit before tax fell to £16.9 million compared to £20.1m a year earlier, impacted by currency and pension credit changes; and investment in its brands.

Northern Foods chief executive Stefan Barden said recent changes at the company had made it 'much stronger'.

'Over the past two years we have created a better balanced and more resilient business, which is making good progress despite these tough market conditions,' said Barden.

Dominance of Big Four boon for BDO

AccountancyAge.com — 2008-11-24T07:53:00.000Z

AccountancyAge.com, Accountancy Age, Monday 24 November 2008 at 07:53:00

Dominance of the Big Four firns in traditional accounting brings advantages for BDO

The dominance of the Big Four in traditional accounting work is expected to give a boost mid-tier rival BDO Stoy Hayward as it secures restructuring work they are unable to take on, according to Simon Michaels, BDO managing partner.

He told the Financial Times it was more likely the Big Four would find conflicts with their regular work, such as audit or advisory, for struggling companies, leaving his group to pick up the pieces.

BDO has taken on the administration of Dawnay Day, the property and financial services group, and the independent valuation of Northern Rock, the nationalised bank, which are among its biggest projects.

'We find ourselves less conflicted than the Big Four so I can only see it going one way with us getting more of the work,' he said.