If they ever publish a book called Horror Stories for Accountants, the WH Smith revenue recognition error will be in it, says Rob Steele, CFO at iplicit
This week, WH Smith saw its share price plunge more than 40% in one morning after it admitted an accounting blunder that caused it to overstate profits by £30m.
The mistake not only wiped £550m off the retailer’s market value but also overshadowed the start of a new era for WH Smith. It recently sold its high street shops to Modella Capital, which is rebranding them as TG Jones, so it could concentrate on its more lucrative outlets at airports, railway stations, hospitals and service stations.
The episode is enough to have finance professionals waking in a cold sweat – because it revolves around the kind of mistake we might all live in fear of making.
Terrifyingly complicated
