Accountancy Age exclusive: Tube accounts 'misleading'
London Underground has been reported to the Financial Reporting Review Panel over claims that its accounts are 'misleading'.
A technical refutation is now being prepared by LU. The company strenuously denies the accounts for the year ending March 1999 are ‘misstated’.
John Newman, senior partner at Smith Williamson, has written to the FRRP claiming LU has ‘overstated’ its assets by £135.9m as a result of work undertaken for the as yet unconstructed CrossRail.
He also maintains the company has failed to capitalise £600m of capital expenditure and omitted to include a backlog of repairs in its accounts.
Newman said: ‘It’s vitally important to the health of the London transport infra structure that we have a proper debate on a proper accounting basis.’
He claims the absence of a commitment to go ahead with CrossRail means spending to date should be written off. He also maintains spending on renewals, estimated at £600m, should be capitalised and depreciated in the normal way.
The allegations come at a time when London Underground has moved to the centre of the increasingly acrimonious battle for London mayor following Ken Livingstone’s decision to stand as an independent candidate.
A spokesman for LU said: ‘Clearly, we do not believe our accounts are misstated and we would be happy to respond to any questions posed to us by the FRRP.’
Newman has been in contact with LU for several months over his concerns but the rail operator now says it will no longer continue corresponding with him.
KPMG is London Underground’s auditor and LU said it followed accounting standards modified by the Secretary of State for Transport.
The FRRP said it was ‘considering’ the complaint.