This article shows that even major businesses do not necessarily keep appropriate accounting records and report properly for various transactions (such as directors’ emoluments, taxes, fixed assets and stocks). As a result of having to report such deficiencies the company received a bad press. If you are still not sure why, as a non-accountant, you are required to take a course in accounting, then this story should be more than sufficient to convince you!
1 How do you think it was possible not to record nearly £5m in directors’ remuneration in the books of account or to disclose it in the annual accounts?
2 What do you think went wrong with the accounting system so that the auditors were not able ‘to form an opinion on group losses and cash flows’?
3 What types of fundamental errors were likely to have occurred in recording ‘certain stocks, tangible fixed assets, directors’ emoluments and related taxes’?
4 What is meant by the phrase ‘amortisation of goodwill’ and ‘a writeback of goodwill’?