Winnifroth6 Aug 2017 12:20
Just read Winnifroth's self congratulatory article re Servion's historic accounts. Here is the FRC's response,
'We have considered, by reference to the company's published accounts, the matter raised in your complaint regarding the company's revenue recogntion policies.
We entered into correspondence with the company on the application of its revenue recognition policies, taking particular account of the high level of bad debts, to which you drew our attention, in the years ended 31 Decemebr 2013 and 2014 and the six months ended June 2015.
Based on the information and explanations provided by the company, which included the results of a review by the directors of the company's revenue recognition policies, WE HAVE CLOSED OUR ENQUIRY, The Directors have reflected the outcome of their review in the 2016 accounts, which includes, on page 24, enhanced disclosures regarding the accounting…'
Here is the link to the accounts and the two paragraphs that are relevant (sorry about formatting)
http://www.servision.net/media/SerVision-PLC-December-2016-Final-300617.pdf
'Income Recognition
– the directors examined the
group’s
income recognition policies in 2016
to assess their
appropriateness. In particular
the directors examined those
elements of revenue recognition policies which may
require judgements or estimates.
In
assessing the amount of income to recognise in the financial statements, the
directors make judgements
in some cases
as to the point at which customers have accepted delivery, either
explicitly or implicitly by their actions, the likelihood of any return and, where products and services are bundled
together the fair value of each revenue stream.
Bad Debts –
the directors are required to
examine the trade receivable balances and exercise their judgement as
to the likelihood of a
bad debts arising if sett
lement has not been made at the time of approval of the financial
statements
. In cases of significant
uncertaint
y on the ability of the Group to collect the debt a provision is made.'
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