Company Reporting, the independent financial reporting monitor, disputes the company’s decision to add a profit charge to last year’s accounts, saying the impairment relates to next year’s results.
‘Recognising this year, understates profit by £5.2m and consequently improves next year’s by a similar amount, falling foul of accounting rule SSAP 17,’ said Company Reporting.
In its end of year results published in October 2001 IAF charged a £5.2m reduction in assets which almost doubled the company’s loss for the year to £13m under accounting standard SSAP 17.
The chairman’s statement said: ‘While trading conditions were poor beforehand, the group has been negatively and materially affected by the tragic events of 11 September in New York. Following a review and appraisal, various asset value adjustments have been incorporated into the results for the year to 30 June 2001 to present a clearer picture.’
But Company Reporting disputed this saying: ‘The September 11 attacks occurred some two months after IAF’s year end so we cannot concur with IAF’s election to treat the impact of the attacks as a profit charge this year.’
Another criticism was levelled at the company for only disclosing this information in the chairman’s statement. The standard states that disclosure must be made in notes to the accounts.
‘This is an issue where we have to rely heavily on auditors to pick up,’ said a spokesman for Company Reporting.
No one was available for comment at IAF.
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