Following research into the sector, the firm has said this lack of rules has led to ‘enormous discrepancies’ in the way these companies present financial reports. The absence of standards means companies have used different methods for recognising revenue and valuing and disclosing programme and film rights.
Investors new to the industry are finding it increasingly difficult to understand the accounts, according to the findings of the Grant Thornton survey carried out on 150 UK independent film and TV companies.
Investment, however, is still readily available for this sector despite the impending downturn, said the research.
And this lack of harmonisation will lead to increased problems if it is not halted soon, Grant Thornton warned.
Terry Back, partner at GT, said: ‘The last ten years has seen a massive growth in the numbers and activities of the UK independent production and distribution businesses. Unfortunately this growth has not been matched by any increase in sophistication in the world of accounting.
‘The UK accounting industry has not developed any accounting standards or guidelines to deal with the needs of our television and film companies.’
Unlike the US, the UK has no industry-specific standards, guidelines or SORPs, statements of recommended practice.
Normally the UK Accounting Standards Board’s Urgent Issues Task Force is responsible for developing SORPs when an accounting anomaly occurs in a specific industry. It is understand that no body from the TV and film industry has approached the ASB.
Back concluded: ‘We believe that the UK Television and Film industry needs a Statement of Recommended Practice – an industry specific set of accounting guidelines promoted by a recognised trade body.
John McVay, chief executive of Producers Alliance for Cinema and Television, said: ‘PACT welcomes this survey and looks forward to its findings. It is clear that a range of sources of investment will be needed to help the Independent Production sector realise its ambitions to be a supplier of award winning content to the global markets.’
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