Butte Mining brought into line by watchdog

Butte Mining has narrowly avoided becoming the first company to be taken to court by the Financial Reporting Review Panel, after agreeing to the watchdog’s demands to slice almost u1m off its profit for the year to 30 June 1995.

Butte, now a litigation vehicle for duped investors following the collapse of the company after allegedly fraudulent behaviour by its former directors, agreed to translate its original profit after tax of #339,000, into a #628,000 loss.

The FRRP said that Butte was contravening the rule that profits must be realised before they can be taken to profit. Butte had included shares received as consideration as turnover, even though they were held under an escrow agreement restricting them from being traded.

The company’s auditors, Cooper Lancaster Brewers, had signed off the disputed 1995 accounts as showing a true and fair view. The accounts for 1992 and 1993 were also the subject of an FRRP investigation, following an earlier qualification by the firm. Partner Michael Chartres said: ‘The interpretation put on the Companies Act and SSAP2 by the FRRP is in our view a highly restrictive interpretation, which in our understanding of the FRRP’s comments goes against the provisions of the International Accounting Standards 18 in respect of measurement of revenue.’

Nick Clark, assistant to the directors at Butte, claimed that the FRRP had been requested to look at Butte’s accounts by Robertson Group, a company with which it was engaged in litigation.

Butte lost a major claim against Ernst & Young earlier this year over work carried out in the USA by Ernst & Whinney.