Accounting and Audit

Preventing Fraud in Accounts – FRC Tightens Audit Rules

There have been repeated examples of the accounts of public companies being fraudulent in recent years. Wirecard was probably the latest and biggest example. I have seen examples of such misdeeds twice in my investment career in my own holdings although losses have been minimal in both cases, the last example being Patisserie (£95 million missing from their accounts). But I have avoided a lot of others where the losses to some investors have been enormous. There have simply been too ...

Record Fine on Deloitte, But It’s Not Enough       

The Financial Report Council (FRC) has fined accounting firm Deloitte £20.6 million (including costs) for its defective auditing of Autonomy. Deloitte is the largest of the big four audit firms and this is what the head of the firm said when talking about their 2019 results: “Our FY 2019 results are a validation of Deloitte’s strategy to deliver high-quality, globally consistent service to our clients while continuing to serve the public interest and working to restore trust in capital markets”. Revenue of ...

Redcentric: Unprecedented Progress for Shareholders – At Last

Two Cheers for the FCA in the Case of Redcentric Two cheers for the FCA: they have achieved a positive outcome for shareholders affected by the case, and have been pragmatic, albeit after a very long time. It is also good to see the other objective of our campaign potentially achieved - of prosecuting individuals for their alleged misdemeanors. Such actions are essential to deter others from criminal activity. Background Redcentric has been an extraordinary case. They key issues at the time when serious ...

Property Shares Spooked by Land Securities and Pets at Home Accounts Attacked

Land Securities Group (LAND) published their annual results yesterday. I don’t hold the stock but what they said seems to have spooked the whole property sector. The company is a large holder of both retail and office property. For retail property, only 38% of rents due were collected within 10 days of the due date in March. For offices it was better at 89% but that is still down from the prior year at the same time. What possibly really scared people ...

Online discussion with the FRC on IFRS developments on Tuesday 5th May 15:30 -17:00

The Financial Reporting Council invites UKSA and ShareSoc members to attend an online discussion on the Endorsement Board on Tuesday 5thMay 15:30 -17:00 on Microsoft Teams. The UK Government is committed to the continued use of IFRS after EU exit to ensure transparency and international comparability of financial statements, and the efficient allocation of capital, including the smooth functioning of capital markets in the United Kingdom.  This event will provide an update for investors on the endorsement of IFRS for use in the ...

Dividends Slashed, Investing for Income, NMC Health and Finablr

Many companies are announcing cancelled, reduced or postponed dividends – two of the latest were Shell (RDSB) and Sainsburys (SBRY). This will hit investors hard who rely on dividends for retirement income. But should they be doing so? Terry Smith of Fundsmith had an article published in the Financial Times today under the headline “Investors: never let a crisis go to waste” in which he attacks income funds. In particular he questions whether the Investment Association should allow funds with “income” in ...

Stock Market Trends, Covid-19 Treatments, Burford Results, Lookers Accounting and Medica

The stock market seems to be returning to normal with a positive trend over the last month despite the economy being in a complete shambles as a result of the “lock-down”. The Government is incurring massive costs to bail-out companies, support the NHS and pay workers to do nothing. We have yet to see the real economic impact of those measures on the Government’s finances. But investors seem to be euphoric because they now realise we are not all going to ...

Communicating with Shareholders in Covid times

The FRC have prepared this infographic about communicating Covid-19 impacts to shareholders (click to view larger image). Online Q&A forums and live streaming of AGMs are good ideas. However, individual investors are an important constituency in this, but not properly considered in the new guidance on AGMs. Shareholders will want to question directors about the impact of coronavirus and its implications on the company liquidity and solvency and will want reassurance about these and the ongoing business model. Never has the importance of ...

FRC, FCA and PRA Joint Statement 26 March 2020

I notice the market has just dipped below 5,600 so clearly most people are not very worried by this FRC, FCA and PRA announcement. Nevertheless I would point out...

NMC Debacle

Trading in the shares in NMC Health (NMC) was suspended on Thursday and a formal investigation by the FCA was announced. The suspension announcement said that the company has...