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

Is predictive analytics the end of the annual audit?

Audit Is predictive analytics the end of the annual audit?

4d Martin Herron, MHA MacIntyre Hudson
Auditors ‘in the dock’ over Carillion as report calls for Big Four break-up

Audit Auditors ‘in the dock’ over Carillion as report calls for Big Four break-up

1w Emma Smith, Managing Editor
PCAOB sanctions former Deloitte Turkey CEOs over altered documents

Audit PCAOB sanctions former Deloitte Turkey CEOs over altered documents

2w Alia Shoaib, Reporter
KPMG South Africa to review past audit work amid fresh scandal

Audit KPMG South Africa to review past audit work amid fresh scandal

1m Alia Shoaib, Reporter
FRC introduces £10m sanctions for Big Four firms

Audit FRC introduces £10m sanctions for Big Four firms

2m Alia Shoaib, Reporter
Ukraine’s PrivatBank files $3bn claim against PwC

Audit Ukraine’s PrivatBank files $3bn claim against PwC

2m Alia Shoaib, Reporter
Grant Thornton to exit FTSE 350 audit market, citing Big Four dominance

Audit Grant Thornton to exit FTSE 350 audit market, citing Big Four dominance

2m Alia Shoaib, Reporter
Big Four dominate FTSE 250 audit market in Q1 rankings

Audit Big Four dominate FTSE 250 audit market in Q1 rankings

3m Alia Shoaib, Reporter