Findings of the Financial Reporting Review Panel in respect of the accounts of Hot Tuna (International) PLC for the year ended 30 June 2009
News types: Corporate Reports, Inspection
Published: 17 December 2010
FRRP PN 129
The Financial Reporting Review Panel (“the Panel”) has had under review the annual report and accounts of Hot Tuna (International) PLC (“the company”) for the year ended 30 June 2009.
In the group accounts to 30 June 2009, an impairment loss of £1.474 million in respect of certain intangible assets was charged to a merger reserve. Both the intangible assets and the merger reserve arose as part of the accounting for a business combination.
Following enquiries by the Panel, the company identified that the fair value exercise undertaken at the time of the business combination had established the historical cost of the intangible assets for the purposes of its group accounts and was not a revaluation. This means that charging the impairment loss to the merger reserve did not comply with the requirements of IAS 36 “Impairment of assets” which requires such impairment losses to be recognised in profit or loss. In its group accounts for the year ended 30 June 2010, the company has restated its comparative amounts for this error, increasing the 2009 loss before tax to £3.7 million.
The Panel welcomes the corrective action taken by the directors and regards its enquiries into the company’s accounts for the year ended 30 June 2009, initiated on 21 May 2010, as concluded.
Notes to Editors
The Financial Reporting Review Panel (“the Panel”) has had under review the annual report and accounts of Hot Tuna (International) PLC (“the company”) for the year ended 30 June 2009.
In the group accounts to 30 June 2009, an impairment loss of £1.474 million in respect of certain intangible assets was charged to a merger reserve. Both the intangible assets and the merger reserve arose as part of the accounting for a business combination.
Following enquiries by the Panel, the company identified that the fair value exercise undertaken at the time of the business combination had established the historical cost of the intangible assets for the purposes of its group accounts and was not a revaluation. This means that charging the impairment loss to the merger reserve did not comply with the requirements of IAS 36 “Impairment of assets” which requires such impairment losses to be recognised in profit or loss. In its group accounts for the year ended 30 June 2010, the company has restated its comparative amounts for this error, increasing the 2009 loss before tax to £3.7 million.
The Panel welcomes the corrective action taken by the directors and regards its enquiries into the company’s accounts for the year ended 30 June 2009, initiated on 21 May 2010, as concluded.
Notes to Editors
- The FRC is the UK’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment. Its functions are exercised principally by its operating bodies (the Accounting Standards Board, the Auditing Practices Board, the Board for Actuarial Standards, the Financial Reporting Review Panel, the Professional Oversight Board and the Accountancy and Actuarial Discipline Board) and by the FRC Board. The Committee on Corporate Governance assists the Board in its work on corporate governance.
- The Role of the Panel is to examine the annual accounts of public and large private companies to see whether they comply with the requirements of the Companies Act 2006 (“the Act”) including applicable accounting standards. Following implementation of the Accounting Regulation (EC) No 1606/2002, this may mean compliance with UK or International Financial Reporting Standards.
- Where breaches of the Act are discovered the Panel seeks to take corrective action that is proportionate to the nature and effect of the defects, taking account of market and user needs. Where a company’s accounts or directors’ report are defective in a material respect the Panel will, wherever possible, try to secure their revision by voluntary means, but if this approach fails the Panel is empowered to make an application to the court under section 456 of the Act for an order for revision. To date no court applications have been made.
- The Chairman of the Panel is Bill Knight and the Deputy Chairmen, Ian Wright and David Lindsell. There are currently 26 other Panel members drawn from a broad spectrum of commerce and the professions. Individual cases are normally dealt with by specially constituted Groups of 5 or more members.
Document created under a former FRC operating body.