Carillion: that's what you get when prudence is abandoned

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UKSA has signed a letter to the Financial Times exposing once again the hole at the heart of modern accounting: the loss of the prudence principle.

In this case, the weakness is in the accounting standard governing revenue recognition. In other cases (and maybe here also) it has been in acquisition accounting. Who knows what else is hidden away in the ungainly structure that has grown over the years around a flawed set of premises?

As the letter says, Carillion is yet another canary in the coal mine. How many more do we need for the government to scrutinise our accounting rules?