Baker Tilly warns of more transparency in M&A deals
City law firms are warned they face greater scrutiny on bills because of new accounting staqndards
Baker Tilly has has
warned city law firms they face greater scrutiny on bills because new accounting
rules will mean merger and acquisition fees will hit clients’ bottom line
directly.
The new regime will push companies to account for deal fees as an expense in
the year incurred, rather than ‘capitalised’ costs of an acquisition, which can
be spread over many years or deferred as goodwill, Legal Week reports.
Under changes drawn up by the International Accounting Standards Board all
deal costs, including legal fees, will be detailed as separate expenses directly
impacting the profit and loss accounts. Currently, these fees sit on the balance
sheet.
‘This will mean directors will want to focus on the headline costs and fees
when it comes to how it is presented to the public,’ George Bull, the head of
Baker Tilly’s professional practices group, said.
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