Pensions accounting reform needed, reinforced by WHSmith

Industry news roundup: week ended 7 Nov 2013:

This week, outrage over WHSmith’s mishandling of its pensions liabilities has led to a new call for pensions accounting reform across the industry.

WHSmith truly stepped in it recently, as it completely neglected to spot a pensions liability in its yearly accounts, leading it to lose £4 million in profits after the oversight was pointed out by the FRC. WHSmith’s chief financial officer Robert Moorhead quickly began tapdancing after the error was uncovered as he tried to downplay the FRC’s discovery, but the truth of the matter is that WHSmith absolutely cocked this one up in a serious way, the bloody idiots. Moorhead can try to spin it any way he wants, but the truth remains that a bloody accounting error saw £4 million erased overnight.

The overall accounting industry agrees with me, too – or at least it does if the latest research is right. In the wake of the WHSmith pensions accounting debacle, an overwhelming 84 per cent of survey respondents indicated that the system needs serious levels of reform because the current regulatory limitations are simply not working properly. Even the 16 per cent that didn’t think so were quick to say that the pensions accounting industry needs shedloads more stability than it has right now.

If nothing else can be learned from this whole ridiculous farce it’s that it pays to have accountants working for you that know what they’re doing. Even a single, seemingly innocuous omission can have incredibly serious ramifications – as WHSmith found out much to its chagrin – so it’s truly of the utmost performance to ensure your accounting team isn’t simply a flock of magpies tapping away at adding machines with their beaks. Sure, it’s a lot less expensive to pay magpies considering they work for birdseed and the occasional shiny bauble, but you need someone with opposable thumbs and who’s not covered in feathers if you really want to make sure you’re not missing anything.

Don’t get me wrong – I like magpies. I just like knowing that firms are actually paying attention to things like pensions accounting as well!

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