Home' A Plus Magazine : March 2013 Contents 8 March 2013
A difference in how European Union member states interpret figures provided
negotiators with enough leeway to strike a deal on the group’s next long-term
budget last month.
EU leaders finally agreed a budget deal for the rest of the decade after a
marathon 25-and-a -half hour negotiation session in Brussels on 8 February. It
marked the first cut in EU spending in its 56-year history.
However, the deal hinged on the fact that the budget is expressed as two
different sets of figures: payments and commitments.
Commitments are legal pledges to fund future projects or programmes, while
payments are forecasts of actual spending. Because pledges do not always result
in demands for cash, payments are always lower, Bloomberg noted.
That difference, which one official described in the Daily Telegraph as “creative
accounting,” was sufficient to finalize an agreement, since many net contributors
base their calculations on payments, while net recipients prefer commitments.
Herman Van Rompuy, the European Council president, proposed deeper cuts
to payments in the 2014-2020 spending plan, winning British support without
alienating poorer southern and eastern member countries that want to maximize
their commitments, Bloomberg reported.
The overall figure for commitments was brought down to €960 billion,
€33 billion lower than the current budget level. Payments were estimated
to total €908 billion, €34 billion less than the last compromise suggested in
U.K. companies could face
tough “going concern” test
Accountants are concerned by a proposal from
Britain’s Financial Reporting Council to imple-
ment changes to the corporate governance
code that would force boards to consider
threats to the company’s business model and
capital adequacy. “My concern is that it will be
difficult for many companies to meet what ap-
pears to be such a tough test,” KPMG’s head
of audit Tony Cates told Economia. The FRC
intends to issue updated guidance by 30 June.
Swatch Group planning
switch to Swiss GAAP
Swatch Group will change from International
Financial Reporting Standards to Swiss Gen-
erally Accepted Accounting Principles even if
securities regulators make IFRS a requirement
for inclusion in the Swiss Market Index. Nick
Hayek, the company’s chief executive officer,
said the Swiss standard would be “more practi-
cal and less theoretical,” Bloomberg reported.
Osaka exchange probes
Manila casino payments
The Osaka Securities Exchange in Japan is in-
vestigating how the Japan-based Universal En-
tertainment Corporation accounted for millions
of dollars paid in 2010 in relation to a casino
project on Manila Bay, Reuters reported last
month. Authorities in the Philippines and the
United States have also been investigating the
accounting used to explain US$40 million in
payments to a political consultant.
Non-standard accounting set
airline losses lower: auditor
Auditors of India’s debt-ridden Kingfisher
Airlines said that the carrier’s third-quarter
net loss would have been much higher had
it followed generally accepted accounting
standards. For the third quarter ended 31 De-
cember 2012, Kingfisher reported a net loss of
7.55 billion rupees (HK$1.1 billion), a 70 percent
decline over the year-ago quarter. Auditors
B.K . Ramadhyani & Company said accounting
methods used by the airline were “not in ac-
cordance with generally accepted accounting
standards prevalent in India.”
PwC tops fees list, edging out
Deloitte amid slower expansion
PricewaterhouseCoopers held the top spot in rankings for global accounting
income for 2012, according to an industry sur vey.
The annual sur vey of fees published by the International Accounting Bulletin
showed that the Big Four accounting firms – PwC, Deloitte, KPMG and Ernst &
Young – took 67 percent of the US$165.4 billion in fees which the sector earned in
2012, a figure little changed from 2011.
Deloitte maintained its position as the second-largest firm, just US$210
million in fees behind PwC’s US$14.9 billion. Growth in income at the big firms
collectively slowed to 6 percent from 8 percent in 2011.
“ There [were] almost no year-on-year changes in market share within the Big
Four,” the sur vey reported.
Still, the fees gap between third-ranked Ernst & Young and fourth-placed
KPMG rose sharply in 2012 to US$1.4 billion, compared with only US$170 million
Outside the Big Four, BDO remains in fifth place in the global rankings of ac-
counting firms, followed by Grant Thornton, RSM, Baker Tilly, Crowe Hor wath
“Creative accounting” seals
deal for controversial EU budget
Double figures help Van Rompuy garner support
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