US bank sees red on UK accounting

BANK of America, which has been campaigning for tougher accounting standards, has touched a raw nerve on this side of the Atlantic.

It has compiled a list of British and European companies that it says are practising 'aggressive accounting' over the value of goodwill. The bank fears that the status of the companies' bonds could be affected by the valuations.

The bank's latest survey of bond markets, published in Financial News, lists 54 companies - including a host of British blue-chip companies - with 'aggressive accounting issues'.

It includes telecoms giant Vodafone which is Britain's biggest company and is valued at £100bn.

Others named include Unilever, BAT, Gallaher, Allied Domecq, Scottish Power, Imperial Tobacco, WPP, GUS, Rexam, mmO2 and Pearson.

Vodafone is included because its acquisition spree over the past five years has raised goodwill to around half its assets. But a Vodafone spokesman said: 'This is an esoteric piece of bond research and it is fundamentally flawed. We are fully compliant with all UK and US accounting rules.

'Goodwill is a non-cash item and is clearly stated on our balance sheet.'

The report coincides with rumours that the telecoms giant is looking at the possibility of a £34bn bid for struggling US mobile phone giant AT&T.

Most analysts are sceptical that Vodafone will get involved.