Deferral of income criticism

Press, 14 October 1986, Page 33

Deferral of income criticism

PA Wellington The action of Corporate Investments, Ltd, in deferring significant income to future years has been criticised by the chairman of the Accounting Research and Standards Board of the New Zealand

Society of Accountants, Mr Tony Frankham. He said ClL’s recent announcement to the Stock Exchange stated that profit for the 15 months ended June, 1986, had been conservatively stated, in that income of

$12.6 million had been deferred to future years. The announcement gave no further details of the transaction. “While this policy is conservative in respect of profit for the recent period, it will necessarily

result in overstatement of profits in future years,” Mr Frankham said in a statement. “If the income was earned in the current year, the policy is inappropriate and is no more

than a simple, but blatant, manipulation of periodic profit, results. “Was the profit $8.5 million as reported, $21.1 million (including the deferral) or some other figure?”