{"id":3364,"date":"2025-08-27T12:24:55","date_gmt":"2025-08-27T11:24:55","guid":{"rendered":"https:\/\/www.robbtax.co.uk\/blog\/?p=3364"},"modified":"2025-08-27T11:25:30","modified_gmt":"2025-08-27T11:25:30","slug":"what-happened-to-wh-smith-how-to-protect-your-business-from-accounting-errors","status":"publish","type":"post","link":"https:\/\/www.robbtax.co.uk\/blog\/what-happened-to-wh-smith-how-to-protect-your-business-from-accounting-errors\/","title":{"rendered":"What happened to WH Smith? How to protect your business from accounting errors"},"content":{"rendered":"

Sometimes small mistakes can have devastating consequences, as WH Smith recently discovered.<\/p>\n

<\/p>\n

An accounting error caused the share value of the retailer to plunge by 42 per cent and serves as a costly reminder to other businesses to keep an eye on their financial records.<\/p>\n

Given the devastating impact of financial mismanagement, we want to highlight why seeking professional accounting services is a vital safeguard for your business.<\/p>\n

What caused the WH Smith accounting error?<\/strong><\/h3>\n

WH Smith misreported profits, and this resulted in a domino effect that caused its value to plummet.<\/p>\n

Due to calculations that had previously been made, financial markets had been expecting the retailer to report profits of \u00a3140 million, but the real profits were closer to \u00a3110 million.<\/p>\n

The origin of the \u00a330 million mistake seems to be an incorrect recording of income, with some having been logged too early.<\/p>\n

Income that should have been logged for the next financial year was incorrectly ascribed to the financial year for which the accounts were being compiled.<\/p>\n

This would have resulted in outside observers believing the business was doing better than expected, as that income would still be expected to appear in the next set of accounts.<\/p>\n

This betrayal of investor confidence is what caused the share price to fall dramatically.<\/p>\n

Disturbingly, this is not the first big business to make the same accounting error.<\/p>\n

In 2014, Tesco also incorrectly booked payments from suppliers, resulting in the company overstating profits by \u00a3326 million.<\/p>\n

As Tesco is a FTSE 100 company, and WH Smith used to be one, the fact that this problem afflicted them both shows how imperative it is that businesses learn from these examples.<\/p>\n

How can you prevent accounting errors in your business?<\/strong><\/h3>\n

Seeking professional advice is always the best place to start when engaging with your accounts.<\/p>\n

Many smaller businesses attempt to file their own accounts without engaging with professional oversight, and this can be an incredibly perilous thing to do.<\/p>\n

There is also a suggestion that in both cases that a more thorough audit could have and should have identified the error before it became problematic.<\/p>\n

This is vitally important for any business that is below the threshold for mandatory audits, as it provides a searing example of how audits can prevent financial issues from escalating.<\/p>\n

Fundamentally, the story reveals a greater need for businesses to understand their accounts alongside those who compile them.<\/p>\n

As a business owner, you should come to learn when it is appropriate to record income and expenditure and to which financial year it must be ascribed.<\/p>\n

Our expert accountants work alongside business owners like yourself to increase financial literacy so that you can understand the financial mechanisms of your business.<\/p>\n

Only by understanding the way that money works can businesses more effectively plan for the future.<\/p>\n

No business is inherently safe from making mistakes, so it is always best to get professional support and guidance to make the most of your finances.<\/p>\n

Keep your business from making a costly mistake by speaking to our team today!<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

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