UK - A clampdown by the Accounting Standards Board on firms that fail to disclose accurate company turnover figures has been welcomed by pension funds.
The ASB has renewed its tough line following evidence of some UK companies misleading investors.
A number of UK-based firms have overstated their turnover figures by including the total revenue for long-term contracts in the accounting year in which the contract was signed, ASB revealed.
NAPF spokesman Andy Fleming said: “Our initial reaction is that anything which leads to better disclosure and better quality of information is to be welcomed.”
ASB chairman Mary Keegan said: “It is clear that some [companies] have ‘pushed the envelope’ in their recent reporting practices.”
The ASB said the board’s intention was to ensure firms report turnover in accordance with the substance of their contractual arrangements with customers.
While the ASB did not identify companies it felt had “pushed the envelope”, it noted that Britain’s biggest tour operator, MyTravel, had adopted more conservative accounting practices after shareholder concern about its policy on revenue recognition.
The company now only records revenue when people have departed on their holidays, rather than when they are booked.
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