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3 March 2003

If a mere supermarket group like Ahold can post $500m of bookkeeping funnies, is any sector safe? In principle, no. But cash conversion may give investors a modest reality check on aggressive accounts.

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Dutch supermarkets group Ahold is to restate $500m of earnings in 2001 and 2002 after its US Foodservice subsidiary wrongly accounted for supplier discounts.

Last year, accounting worries overshadowed world stock markets following scandals at growth companies like Enron which operated untransparent trading subsidiaries Worldcom which improperly capitalised operating expenses and KPNQwest which failed to amortise revenues from multiyear contracts over the life of the deals. Meanwhile, insurers Swiss Life and MLP also suffered from concerns about the transparency of their published accounts.

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