Sometime back in 2019, we wrote an article entitled “Perpetual securities are debts, not equity. Here’s why.” (The article was published in the April 1 issue of The Edge. To read it, please scan the QR code.)
In that fairly theoretical and lengthy piece, we articulated the fact that practising accountants were intentional in misclassifying perpetual securities (or perps) as equity — to strengthen the balance sheets and income statements of the clients that they work for and audit. While they relied on certain accounting standards (like IAS 32) for justification, we argued that practising auditors were drawing upon a limited and specific section while ignoring the context and, indeed, refusing to read the entirety of the statement or facts.