STEPHEN CRANSTON: Hawkeyed Terry Smith’s Fundsmith likely to survive coronavirus
When it became clear in the early 1990s that I had to learn the basics of accounting for my job, I was given the usual “accounting for dummies” books and went to some worthy lectures at Wits Ubiversity. But I was lucky enough that it was just the time when the controversial bestseller Accounting for Growth came out. It was written by Terry Smith, an award-winning banking analyst in London.
Smith argued that most of the growth in British companies in the 1980s — the Thatcher years — was due to creative accounting, not the improved efficiency of British industry. You could be forgiven for thinking the manipulation identified by Smith closely mirrors Markus Jooste’s bag of tricks at Steinhoff. Techniques include acquisition accounting, deferred consideration, extraordinary and exceptional items, off balance sheet finance, contingent liabilities, brand accounting, changes in depreciation and currency mismatching...
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