Accounts anticipate change

Click to follow
The Independent Online
PROPOSALS to ban companies making provisions on acquisition may already be having an impact on accounts, according to a survey which shows that the number of companies doing so is already declining, writes Heather Connon.

Company Reporting, the Edinburgh firm which monitors accounts, found that the number of companies which had made purchases but whose accounts showed no evidence of provisions, has risen from 22 to 26 per cent over the past six months. The firm believes that this is partly the result of the tougher accounting regime already in place following the introduction of FRS3 on disclosure in accounts.

The rules are due to be tightened further next year, when the Accounting Standards Board plans to issue a standard which will ban pre- acquisition provisions completely.

Williams Holdings, which made full use of provisions during its 1980s acquisition spree, has stopped making provisions on the purchases it has made this year. But the survey found that 40 per cent of companies which made acquisitions were still providing against them.

Comments