Year-end moves questioned by accounting body

Companies such as Independent News & Media, which changed their year-ends to avoid the implementation of an accounting standard, have been questioned by the Leinster Society of Chartered Accountants. Mr Bill Collins, the incoming chairman of the Leinster Society of Chartered Accountants, has said that unlike the UK, the Republic has no legislation allowing for the withdrawal and reissue of incorrect financial statements.

"While organisations, sometimes motivated by satisfying stock market expectations, continue to adhere to the letter of standards as opposed to their spirit, regulation is bound to become more prescriptive," he said.

Although not naming any specific company, Mr Collins' reference is obviously directed at Independent News & Media.

He asked "if it is acceptable for organisations to change their year-end reporting date with the sole motive of avoiding the application of given accounting standards"?

Independent News & Media changed its financial year-end from December 25th, 1998, to December 18th, to avoid having to implement a new accounting rule which would have had a serious impact on its results.

It decided to make a once-off reduction of £360 million (€457 million) in its reserves.

Six months later, the company showed its irritation with the FRS10 rule - under which intangible assets like newspaper titles cannot be taken into balance sheets - by producing two balance sheets, one in line with FRS10 and the other including the group's valuation of its titles under intangible assets.

Commenting on Mr Collins' statement, a spokesman for Independent News & Media said: "We changed the year end to make the point that we disagreed with FRS10, not to avoid its consequences.

"However, we reiterate the point made by Liam Healy [the group's chief executive] in April last year, who said in the annual report: `We believe that the masthead values contained in the balance sheet are the result of many years of investment and should not be arbitrarily adjusted'."

Mr Collins, addressing the society's annual general meeting, also said the Government should move quickly to provide statutory backing for accounting standards by establishing a financial reporting review panel.

On a different topic, Mr Collins also said it was time to unite the various accountancy bodies.