London Underground has been reported to the Financial Reporting Review Panel over claims that its accounts are ‘misleading’. John Newman, senior partner at Smith & Williamson, has written to the FRRP claiming LU has ‘overstated’ its assets by £135.9m as a result of work undertaken for the still-to-be constructed CrossRail. He also maintains the company has failed to capitalise £600m of capital expenditure and omitted to include a backlog of repairs in its accounts. A technical refutation is being prepared by LU. The company strenuously denies the accounts for the year to March 1999 are ‘mis-stated’. But Newman said: ‘It is vitally important to the health of the London transport infrastructure that we have a debate on a proper accounting basis.’ He claims the absence of a commitment to go ahead with CrossRail means spending to date should be written off. Newman also maintains that spending on renewals, estimated at £600m, should be capitalised and depreciated in the normal manner. The allegations come at a time when the debate about the underground has moved to the centre of the increasingly acrimonious battle for London mayor following Ken Livingstone’s decision to stand as an independent candidate. A spokesman for LU said: ‘We don’t believe our accounts are mis-stated and we would be happy to respond to any questions posed to us by the FRRP.’ Newman has been in contact with LU for several months over his concerns but the company says that it will not continue to correspond with him. The auditor of London Underground is KPMG, and LU said it followed accounting standards modified by the Secretary of State for Transport. The FRRP said it was ‘considering’ the complaint.
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