We suspect Colin - corporate entertainment on the cheap? BJ Laidlaw FCCA, Carlisle, Cumbria Talk of battle is premature Your leader (16 September, page 8) was right to indicate the importance of the changes which will result from the introduction of resource accounting and budgeting. However the news item on page 1 went too far with talk of 'victories' in the timing of the changeover from appropriation accounts to resource accounts. I know the excitement of battle is more interesting than hard-won progress by departments but there is a mutual interest of the Treasury and the National Audit Office that departments are ready on time. The NAO deserves a great deal of credit for their policy of helping departments without compromising their independence. Andrew Likierman, head of the government accountancy service The value of external audit I am a firm believer in the value of the external audit to a company of any size as detailed by Jonathan Beckerlegge (23 September, page 20). However, I am opposed to it being a statutory requirement, except for organisations that have a wider public interest, for example with quoted companies and charities. If the compulsory requirement for audit is removed for the vast majority of companies, it will be up to the accountancy profession to market the obvious value of the audit to directors and investors/lenders. The requirement to have an audit could be requested by a bank seeking to lend to a company or a shareholder looking to invest. Auditors should not hide behind a statutory requirement for the audit, but instead convince the public that they are selling a value-added and worthwhile service. Very few owner-managed businesses will have the resource internally to prepare annual accounts in accordance with UK GAAP and Companies Act requirements. The directors will therefore need to buy in this expertise. To protect the interests of the UK economy, Companies House should be able to levy a monetary penalty on companies that file incorrect accounts, in the same way that it does for accounts filed late. Serial offenders should be barred from holding office as a company director. In my view, the value of the audit to customers and suppliers is less helpful. As a director of a growing business I would like to see abbreviated accounts abolished. It is a misnomer to say that the ability to file abbreviated accounts is removing a burden on smaller businesses. In fact it means that two sets of accounts need to be prepared. Further, small company audits are almost useless in assessing a company's financial health - audit or no audit. If owner-managed businesses wish to take advantage of limited liability they should be required to file full accounts. Christopher Stent, Cranbrook, Kent Tax confusion spreading Reading 'Taxman feels a bit confused' (16 September, Letters) we recently had a mailer round from one of the Big Five telling exactly the same tale - so it's not just the Revenue which doesn't understand, or is there a hidden agenda for next year's whammy! Could it signal the end of the SC6/C154 scenario and they'll all be direct labour? Antony Taylor ACGI, MBA, FCA, Harborne, Birmingham Ruling is uncharitable Your front page article (12 August), highlighting the distortions to reported results which would be caused by including pension fund assets at market value, mirrors the concerns of those of us within the charities field. Similar provisions in the Charities SORP have made the published accounts totally valueless as a management tool, with the result that two sets of accounts are produced, one in order to manage operations on a month-to-month basis, and one for public consumption as a compliance exercise at the year end. As an accounting principle, the inclusion at market value only works if the numbers are immaterial. Since it is mainly large companies and organisations which have self-administered pension funds, it can safely be assumed that we will not be considering insignificant figures. The most likely outcome is that companies will transfer their pension fund assets to fund managers or insurance companies to get them off the balance sheet, to the probable detriment of their staff and pensioners. The market value principle is wrong for pension funds, and equally wrong for charities, because what we are considering here are long-term investments, short-term fluctuations in the value of which have no bearing on annual results. So let the voice of those of us who actually produce and use accounts be heard for a change. Drop the proposal for pension funds and reverse the ruling for charities. Brian Worboys, Broomfield, Essex Will final-salary schemes give us reasons to be grumpy? Once again the myth that final-salary pension schemes are sacrosanct appears - this time in your letters page. Rod Currie (9 September, - page 15) states that such schemes 'secure for employees a reasonable standard of living in retirement without exposing the employee's biggest asset (their pension) to the volatility of the market'. Not true! I have a number of years 'value' in a final pension scheme, left the company in 1993 and was given the statement of my 'fund' and the pension receivable, based on service. This statement was drawn up by a leading life company, which employs its own actuaries. However the employer, an Insurance Company, is now in run-off, with plenty of cash and long-term liabilities, and they have 'hived off' the pension scheme to an Independent Trustee. A substantial deficit has been discovered and my former employer, and the life company are 'wriggling out' of their responsibilities. Former employees have been informed that they will not receive the promised pension, based on their final salary, but one based on market forces! Therefore beware - your final-salary scheme may not be what you believe it to be! Brian Clifton, Essex All letters should be sent to: The Editor, Accountancy Age, VNU House, 32-34 Broadwick Street, London W1A 2HG Tel: 0171 316 9236 Fax: 0171 316 9250 Or email us on: [email protected] Accountancy Age reserves the right to edit letters for space or clarity. Please include your title, company name and a daytime telephone number.
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