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21st Century Accounting?
Richard
For some considerable time towards the end of the last century it became apparent that somewhere approaching half the entries made in double entry book-keeping had no basis in reality.
Therefore it was agreed that it was just a waste of time making and allegedly auditing these entries.
So a system of single entry was devised.
By this new method, the tax is calculated---and if it was wrong, the next year you just put the new figure. Without having to check it, and make all the explanations, you save considerable time and money.
Your calculations show how it works!!!!
:-)
Jrff
KPMG--The major culprit?
Richard
Thanks
I see the links are above---will try to look at them over the week-end.
Meanwhile do you feel these alleged mis-statemants are a problem with all the Big 4, or just one of them?
Rgds
Jeff
Jeff - methodology
Jeff
A note on methodology was included in my previous report - Mind the Tax Gap - do you want to look at that?
A note on the number of audits each of the Big 4 does is in the report.
Richard
Is it the tax, or is it the profit?
Richard
I am still attempting to understand alleged inter-company debtor "assets" on Heritage plc's Balance Sheet, which led to a susbstantial investment.
I believe that Morrisons is still trying to comprehend similar "assets" of some £771.9m on Safeways last Balance Sheet, which presumably contributed to the agreed purchase price.
Both these companaies were audited by the London Office of KPMG. Heritage plc directly by Michael Hughes, who was until recently Chairman of KPMG Audit LLP.
These "assets", presumably, would have found their way onto the Balance Sheet through profit?----forgive me, I am not an Accountnnt.
However, if the profit was not actually made, you would not want to pay tax on it----therefore an adjustment the following year?
So perhaps it is not the previous years tax liability that is being adjusted----maybe it is really the previous year's profit?
Jeff Lampert
(former Chairman of Heritage plc)
Re-Statements
Richard
Thanks!
Did you do a simple comparison (Profit and Tax the same year) or did you do a more"catchall" say a total of re-statements over 5 years for each of your companies?
Also do you have any idea on how many of them are KPMG Audits.
As I recall LloydsTSB went to PWC?
Rgds
Jeff
No, it's tax
Jeff
Good point - partly becasue you, like me, are questioning the credibility of the accounts.
But it is the tax that is being re-stated here. Profit restatements have to be declared elsewhere.
At least, that's what it looks like - but as the figures do not, quite literally, add up it is a little hard to be sure - so maybe you are right.
And that's the most important point. How do we know when the accounting is not up to scratch, as seems to be the case?
Richard
Richard, I'd be interested to know
whether you have put any of your concerns to the companies concerned for comment, whether they have commented in response, and what (if it is possible to generalise) was the nature of those responses?
Do they connect?
Richard
The list of your tax re-statements is:
Lloyds Tsb
Tesco
Unilever
Prudential
Cadbury Schweppes
Scottish & Southern Energy
Reuters Group
Compass
Do these companies also head the profit re-statements?
I believe that TSB was amongst the worst acquisitions ever made. Compare Lloyds share price post acquisition with Barclays or HSBC and TSB looks like a "poison pill".
Perhaps one that had a great deal of false profit? Maybe Morrisons/Safeways does not want to go the same way?
And TSB was audited by my old friend Michael Hughes of KPMG.
Have I read too many "conspiracy theory" books?
Is it just KPMG?
Rgds
Jeff Lampert
Lively discussion
We're having a lively discussion about this.
My concern is one of credibility.
Asking for comments
Clint
I did not ask for comments. The reason was simple. I was reviewing reporting. The reporting should explain what is going on. It should not require additional comment. So I felt that to ask was to contravene the hypothesis I was testing.
If the companies want to comment now I'd be delighted to see what they have to say.
Likewise the Big 4 firms.
Richard
Restatements
Jeff
Lloyds at least did frequent restatements of profit. The trend is not so apparent in the rest.
Richard