The Financial Reporting Council (FRC) has announced the findings of a review of WH Smith's annual report and accounts for the year ended 31 August 2012, which has concluded that the high street retailer did not correctly recognise some of its pension scheme contributions.

The principal issue arising from the review related to the company's decision not to recognise as a liability in its accounts a schedule of contributions prepared under section 227 of the Pension Act 2004 between a subsidiary of the company and the company's pension trustee.

WH Smith did not view the schedule of contributions as a minimum funding requirement to be accounted for in accordance with IFRIC 14 IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction.

Following correspondence with the Financial Reporting Review Panel (FRRP) of the FRC's conduct committee, WH Smith has accepted that the schedule of contributions is a minimum funding requirement within the meaning of IFRIC 14 and should have been accounted for as a liability in its accounts for the year ended 31 August 2012.

As a result, WH Smith has restated the comparative amounts to the results reported in its 2013 preliminary announcement, published today, which show the total group profit before tax up 6% to £108m (2012: £102m). The effect of recognising the liability on the comparative amounts is to reduce net assets at 31 August 2012 from £149m to £95m (at 31 August 2011, a reduction of net assets from £156m to £94m). Profit after tax for the year ended 31 August 2012 has been reduced by £4m. There is no change to profit before tax and no impact on cash.

Following the corrective action taken by the company, the conduct committee has said its investigation, which was initiated in May 2013, is now closed.