PracticeAuditInvestment bank slams Boots’ accounting methods

Investment bank slams Boots' accounting methods

Investment bank Credit Suisse First Boston has accused high street chemist Boots of boosting its profits by using flattering accounting techniques.

In a recent report, hotly contested by the retail giant, CSFB analysts said the company’s pre-exceptional pre-tax profit ‘has to be adjusted’ in order for investors to get a clearer picture of underlying growth.

They highlighted Boots’ accounting for exceptional items, the incorporation of off-balance sheet derivatives, and the benefit of its lower pension costs under SSAP 24.

The report said: ‘We believe that many investors are aware of Boots’ recurrent use of exception items, but are generally unaware of the other issues, which on our estimates will collectively contribute £65m to Boots’ reported pre-exceptional pre-tax in March 2002.’

Boots’ share price dropped following the release of the report, reflecting sensitivity over accounting issues in the wake of Enron.

In a statement, Boots responded that its reporting was ‘transparent’ and the information in its annual report ‘complies with accounting standards’. CSFB’s claim that £65m had been ‘added’ to reported pre-exceptional profits, Boots said, was not the case.

Boots shares were last trading at 673p.

Related Articles

The ‘uncomfortable truth’ behind FRC’s Big Four fines recommendations

Audit The ‘uncomfortable truth’ behind FRC’s Big Four fines recommendations

5d Carl Johnson, Stephensons
BDO holds off Big Four to retain top position as AIM auditor

Audit BDO holds off Big Four to retain top position as AIM auditor

6d Alia Shoaib, Reporter
FRC urged to fine Big Four firms penalties over £10m

Audit FRC urged to fine Big Four firms penalties over £10m

3w Alia Shoaib, Reporter
EY to audit Standard Chartered bank

Audit EY to audit Standard Chartered bank

1m Alia Shoaib, Reporter
KPMG replaces PwC as Croda auditor

Accounting Firms KPMG replaces PwC as Croda auditor

2m Emma Smith, Managing Editor
EY fined £1.8m over Tech Data audit

Accounting Standards EY fined £1.8m over Tech Data audit

2m Emma Smith, Managing Editor
Top 50+50: Firms post significant growth in new tax and audit rankings

Audit Top 50+50: Firms post significant growth in new tax and audit rankings

2m Emma Smith, Managing Editor
FRC closes investigation into PwC over Barclays compliance

Accounting Firms FRC closes investigation into PwC over Barclays compliance

2m Alia Shoaib, Reporter