Following a decision made between the company directors and its auditors, KPMG, Care UK tightened its interpretation of the accounting rule, FRS 15 Tangible Fixed Assets, since it published its interim results.
Richard Clough, deputy chairman, told AccountancyAge.com: ‘The interpretation method has been tightened. We expected to charge less to the profit and loss account than previously thought.’
The company said the rule reduced pre-tax profits by Pounds 400,000 because it now limited the company’s ability to capitalise certain operating expenses.
FRS 15, effective since March 2000, requires companies to ensure tangible fixed assets are accounted for on a consistent basis. Consistently with previous practice the rule allows a choice as to whether tangible fixed assets are stated at cost or at revalued amount.
Disappointing full-year profits for the year to September 2001 were also blamed on a delay in the take-up of new facilities for people with learning disabilities.
Care UK shares closed yesterday 221/2p lower at 190p.
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