News in brief – 3 September

BPO on the increase

Outsourcing accountancy and finance functions, and other non-core business operations, is rapidly gaining credibility as an effective means of improving corporate performance, according to research conducted for PricewaterhouseCoopers. The survey of 304 multinational companies indicated that 63% have already outsourced a business process, while 23% plan to do so. Overall, 87% of respondents agreed that Business Process Outsourcing, as the trend is known, enables management to concentrate on their companies’ core competencies.

Lib Dems ask for tax reform

The Liberal Democrats have called for an all-party Commons Select Committee on taxation reform to take evidence and make recommendations on how to simplify the existing ‘economically unfair and over complex’ system. ‘Taxation is a contentious political issue on which rational debate is stymied,’ a party release stated. Suggestions included: an increase on green taxes on pollution, the phasing out of ill-judged relieves and allowances which help the well-off, greater use of raising tax for specific purposes, the raising of personal allowances to #10,000 a year, and a new 50% rate for those earning more than #100,000 annually.

Councillor fraud case

A former Doncaster councillor became the second casualty of the ‘Donnygate’ inquiry into council sleaze when he was jailed for six months after admitting falsifying expenses of #3,500. David Jobes, 43, joins Jack Riley, 69, who was jailed for 28 days last month after an investigation by the district auditor and police, codenamed Operation, Danum found he had falsified expenses of #214. Five other councillors have been arrested on suspicion of expenses fraud.

Spanish firm shirks merger

A top-three Spanish law firm has rebuffed merger proposals by several Big Five firms, including KPMG. The Madrid-based Gomez-Acebo & Pombo said it had been courted by the firms, which want to challenge Arthur Andersen’s 590-lawyers firm Garrigues & Andersen.

Andersen US lawsuit

Andersen Consulting this week faced a possible US lawsuit from clothes retailer J Baker over a non-millennium compliant hardware package installed in 1991. In a pre-emptive move, Consulting filed a lawsuit in a Massachusetts court asking for a declaratory judgement that Baker met its contractual obligations. Baker argues that it would have insisted on the mainframe being year-2000 compliant when installation began in 1989, if Consulting had raised the issue.

Deloittes criticised

Big Five firm Deloitte & Touche has been criticised for its role in Railtrack’s tax liability fiasco. Railtrack, which runs the UK’s track and signalling, has admitted it incorrectly advised its 300,000 shareholders, despite taking advice from accountants Deloitte & Touche. The mistake has forced Railtrack to write to all shareholders, highlighting the error. A spokeswoman for Deloitte & Touche refused to discuss client business.

PAC asks for accountability

Government departments should value all businesses before privatisation, the House of Commons Public Accounts Committee has decided. The PAC also wants careful examination of the type of sale before action, and says clawback provisions should be inserted to ensure any excess profits made by the purchaser benefit taxpayers. Advisers, including accountants, should be appointed after full and open competition. The report highlighted the difficulty justifying an uncontested #4.4m appointment, without competition, of Coopers and Lybrand appointment as advisers on the sale of the UK Atomic Energy Authority. It also criticised reporting accountants Binder Hamlyn, which charged four times the budgeted fee figure.

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