Warning of ‘time bomb’

Press, 30 July 1986, Page 44

Warning of ‘time bomb’

PA Wellington The president of the Society of Accountants has warned the accounting profession and the financial community of “a ticking time bomb.” Mr Gary Lloydd, in a speech prepared for delivery to the Dunedin branch of the society, said that the ingredients of the bomb are a highly inflated sharemarket, domination of the market by high-flying invest-

meat companies, an increase in what he describes as “creative accounting” and deviations from standard accounting practices. “It is vital that all the groups in the financial reporting industry — business, company directors, accountants, the Stock Exchange and the commercial affairs division of the Justice Department — be aware of and recognise these dangers, and take respons-

ible steps to maintain control,” Mr Lloydd said.

As president of the professional body representing the accounting profession, Mr Lloydd is particularly concerned about two of the ingredients of the time bomb. “These are an inexorable increase in creative accounting which pushes both traditional accounting concepts and our own Statements of Standard Accounting Practice to

their limits of credibility, and increasing instances of deviation from those SSAPs with the concurrence of the auditors.” Mr LLoydd believes that if the time bomb explodes, accountants will be affected by much of the fallout “I urge the accounting profession, and the rest of the financial community, to do their best to defuse the bomb before it reaches the critical stage.”