It would be useful if someone could give a clear interpretation of these figures and what they mean.
And if they mean what we think they mean, what the hell can be done to stop it?
It's how accountants and External Auditors operate the world around. They'd deny it of course but the deliberately present the figures in a way that you can only fully understand if you have access to the transactional data that makes each item up.
Nothing sinister here it is just the way they do it. Accountancy has had several attempts at what can be best understood if I call it a "plain english" campaign. But each time they do the issue is fudged.
The external auditors role is to tell the outside world that the accounts look to be accurate and truthful. The auditors are legally required to sign up any concerns with the actual figures (eg if the bad debt provision was unrealistically low they would have to say so) They are also required to comment on Governance (ie that risks are being controlled reasonably) and also have to comment on "going concern" (whether the numbers suggest that the business can keep trading - income will exceed outgoings etc)
The external auditors can be taken to court if they screw up. Because of this all the statements have a great tendancy to be vague and guarded, ultra cautious and plastered with caveats.
Think of ENron etc etc - all the big balls-ups that the external auditors missed.
Any caveat in the auditors statement is a "qualification". Companies want unqualified sign-off for their figures.
It is unusual for the auditors to qualify accounts with respect to "going concern" I am guessing in this case that it is because the figures lack clarity and transparency. It does not necessarily mean that the sky is about to fall in, but it clearly signals concern.
In a plc, qualified accounts would prompt a swift response - possibly director resignation, possibly changes to the way some part of the accounts are reported.In the case of a privately owned company, all it really does is undermine their credit rating. There are rumours of the cowboys paying 15% interest on their borrowings, the qualified accounts won't have helped them negotiate rates.
If I get hold of the accounts late tonight I'll try and see if I can spot any real info in them.
Source - Me, qualified Internal Auditor with 20+yrs experience
