Paper manufacturer Inveresk's books have been referred to the FRRP after booking in a transaction at what auditor KPMG considered too early a date
The company has fallen foul of company accounts scrutinisers after failing to
adjust its 2004 figures following an audit qualification.
The company’s books had been referred to the Financial Reporting Review Panel
(FRRP), part of the Financial Reporting Council, after booking in a transaction
at what auditor KPMG considered too early a date. The FRRP, steered by chairman
Bill Knight, agreed with the auditor, and Inveresk has now acquiesced.
The problem arose over an August 2004 decision by Inveresk to enter into a
contract to sell Borelands reservoir in Inverkeithing. The contract was
conditional upon obtaining detailed planning consent but only outline consent
had been granted by the time the land was sold on an unconditional basis in
March 2005 to a different party.
However, Inveresk included the sale in its 2004 accounts, arguing that it
represented a straight substitution for the contract that failed to be completed
at the end of the year.
Auditor KPMG disagreed, qualifying the company’s accounts, and the FRRP
upheld its decision.
‘The March 2005 sale should have been disclosed in the note to the accounts
as a non-adjusting post-balance sheet event in accordance with paragraph 23 of
SSAP 17,’ said an FRRP statement. The company has now adjusted its figures,
turning a 2004 profit of £184,000 into a loss of £417,000 and causing a £601,000
reduction in the opening reserves at 1 January 2005.
Inveresk chairman Jan Bernander insisted the directors believed the position
was fully understood by readers of accounts but said the alteration ‘does not
have any impact whatsoever on either the company’s tax position or cashflow’.