WPP defends accounting policies
Acquisitive communications giant WPP has dismissed criticism of its accounting policies amid the worst trading conditions seen in the industry for over a decade.
Reports that the world’s biggest advertising group had boosted profits by refusing to take impairment charges on recent acquisitions despite the downturn have been strongly denied, reports the FT.
The group, which bought 77 companies in the two years to December 2001 at a cost of £3.7bn, used two different accounting treatments for goodwill. Small company values were amortised while the value of its larger acquisitions, which include J Walter Thompson, Young & Rubicam and PR firm Hill & Knowlton, are to be reviewed annually.
WPP, led by Sir Martin Sorrell, provides communication services to more than 300 of the Fortune Global 500 and over half of the Nasdaq 100. The group is due to publish first-half results on August 20.
It recently replaced its auditors Andersen, with Deloitte & Touche.