PracticeConsultingPFI growth prompts revamp of Jarvis accounts

PFI growth prompts revamp of Jarvis accounts

Strong growth in the number of PFI deals for Jarvis, the facilities management group, has sparked a radical overhaul of the company's accounting procedures.

Jarvis yesterday revealed its accounting shake-up alongside booming order books that have doubled over the past year to £2.2bn despite a boardroom shake-up and a high-profile dispute with Railtrack.

Last month PricewaterhouseCoopers resigned its audit after a dispute over escalating fees – the firm believed the complexity of the Jarvis audit required additional fees to be charged.

Sucessor Ernst & Young saw through this week’s annual results after only a month as new auditor. Pre-tax profits for the year remained flat at £31.6m compared to £31.7m the previous year.

New contracts under the PFI and University Partnership Programme (UPP) prompted the board to review accounting policies.

Finance director Henry Lafferty said: ‘The decision had been taken to adopt a policy which will better reflect the profile of the business.’

The changes will smooth profit flow by spreading profits and turnover from the design and preparation stage of contracts over the period of construction.

Lafferty said: ‘The changes will not effect the total cash flows, revenues or profits that will be earned by the group over the life of these contracts. It only alters the timing of the recognition of revenues and profits.’

Chief executive Paris Moayedi added that all new contracts would involve a partnering approach where the two sides could inspect each others books, to avoid the adversarial element of traditional contracts.

Jarvis has earmarked £12m to spend on upgrading computerised management systems provided by Cap Gemini and Oracle.

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