tasteless Financial Reporting Disclosure Issues - (Part 2) Directors description

Asset - tasteless Financial Reporting Disclosure Issues - (Part 2) Directors description

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In Part 1 of this report we dealt with the base financial reporting issues within the Directors report which have become subject to single scrutiny by both the accounting institutes and representative/regulatory bodies. In this report we will discuss the base financial reporting disclosure issues which are prevalent in the Auditor's Reports.

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Auditor's Report

From an Institute's impart perspective one of the key Reports to "get right" is the Auditor's Report. The former guidance document is Apb Isa 700 "The Auditor's report on Financial Statements" and Apb Bulletin 2006/01 (for Irish registered companies) and more recently Apb Bulletin 2009/02 (for Uk registered companies).

Title Introduction Respective Responsibilities of Director's & Auditors Basis of Audit Opinion Opinion Emphasis of Matter concept (if applicable)

Title

Each auditor's report should be titled "Independent Auditors report to the Members of Sample Co. Minute for the year ended????

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Introduction

The introduction section consists of two paragraphs

Paragraph 1

We have audited the financial statements of firm Name for the year ended???? which comprises of the behalf and Loss Account, the equilibrium Sheet, and the related notes. These financial statements have been ready under the historical cost convention and the accounting policies set out therein.

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Paragraph 2 "The Bannerman Paragraph"

This report is made solely to the company's members as a body in accordance with Section 193 of the fellowships Acts, 1990. Our audit work has been undertaken so that we might state to the company's members those matters that we are required to state to them in the audit report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to whatever other than the firm or the company's members as a body for our audit work, for this report, or for the opinions we have formed.

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Respective responsibilities of directors and auditors

The next section of the Auditor's report deals with the respective responsibilities of Directors and Auditors and should read as follows:

"As described in the Statement of Directors' Responsibilities the company's directors are responsible for the preparing of the financial statements in accordance with applicable law and generally appropriate Accounting convention in Ireland including the accounting standards issued by the Accounting Standards Board and published by the form of Chartered Accountants in Ireland/Certified communal Accountants/Institute of Chartered Certified Accountants.

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (Uk and Ireland) promulgated by the Auditing Practices Board (Uk and Ireland).

We report to you our concept as to either the financial statements give a true and fair view in accordance with generally appropriate Accounting convention and are properly ready in accordance with the fellowships Acts, 1963 to 2006. We also report to you either in our opinion: permissible books of inventory have been kept by the company; whether, at the equilibrium sheet date, there exists a financial situation requiring the convening of an amazing general meeting of the company; and either the data given in the Directors' report is consistent with the financial statements. In addition, we state either we have obtained all the data and explanations considerable for the purposes of our audit and either the equilibrium Sheet and behalf and Loss are in business transaction with the books of account.

We also report to you, in our opinion, any data specified by law regarding directors' remuneration and directors' transactions are not given, and where practicable, consist of such data in our report.

We read the Directors' report and consider the implications for our report if we become aware of any apparent misstatement within it."

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Basis of audit opinion

The Basis of Audit concept section typically consists of two paragraphs as set out below

Paragraph 1

"We conducted our audit in accordance with International Standards on Auditing (Uk and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an estimate of the considerable estimates and judgements made by the directors in the preparing of the financial statements, and of either the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed."

Paragraph 2

"We planned and performed our audit so as to obtain all the data and explanations which we thought about considerable in order to provide us with sufficient evidence to give uncostly assurance that the financial statements are free from material misstatement, either caused by fraud or other exception or error. In forming our concept we also evaluated the uncut adequacy of the presentation of data in the financial statements."

Note

Variations to Paragraph 2 may be required in cases where the auditor was unable to plan or/and accomplish the audit so as to obtain all the data and explanations prominent to a limitation of scope except for or disclaimer opinion. We will look at this in more information when we look at Modified Audit Opinions in a time to come edition of this Newsletter.

The following paragraph is also added in cases where the Auditor is availing of the Apb Ethical Standards-Provisions available to Small entities

"We have undertaken the audit in accordance with the requirements of the Apb Ethical Standards - Provisions available to Small entities under the circumstances set out in note 20 to the financial statements. May Not Be Applicable"

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The final section of the auditors report is the concept Section

In the majority of cases the Auditor is required to give their concept on the following items

"That the financial statements give a true and fair view, in accordance with generally appropriate Accounting convention in Ireland, of the state of the company's affairs as at date and of its behalf for the year then ended and have been properly ready in accordance with the fellowships Acts 1963 to 2006.

That the auditor has obtained all the data and explanations they thought about considerable for the purpose of the audit.

That in their opinion, the firm has kept permissible books of inventory and that the company's financial statements are in business transaction with the books of account.

That in their opinion, the data given in the Directors' report is consistent with the financial statements.

That the net assets of the company, as stated in the equilibrium sheet are more than half of the amount of its called up share capital and, in their opinion, on that basis there did not exist at date a financial situation which, under section 40(1) of the fellowships (Amendment) Act 1983, would require the convening of an amazing general meeting of the company."

Note

The statement regarding net assets above is not required for fellowships Minute by Guarantee.

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We will look at Modified Audit Opinions in a time to come edition of this Newsletter.

Emphasis of Matter

In accordance with Isa 700 an emphasis of matter concept should be included in the Auditor's report if there is a:

Material matter regarding a going concern problem

Significant uncertainty (other than a going concern problem), the resolution of which is dependent upon time to come events and which may affect the financial statements

Common Mistakes made

The sign off of the Auditor's report should consist of the terms Registered Auditor in the accountants name and should be dated appropriately.

The paragraph and the notes to the accounts are not definite sufficient to the firm and its single issues

Including the Emphasis of Matter paragraph in the body of the Auditor's report as opposed to being the last paragraph of the Report

Including the incorrect fellowships Acts references

Including the Net asset paragraph in the Financial Statements of firm Minute by Guarantee

References made to Auditing Standards as opposed to International Standards on Auditing (Uk and Ireland)

Mis-use of the Apb Ethical Standards - Provisions available to Small entities paragraph, either not including it when it should have been or vice versa

Not amending Paragraph 2 in cases where limitation of scope exists

References made to Auditing Standards as opposed to International Standards on Auditing (Uk and Ireland)

Including a paragraph regarding the impart of Operating and Financial Reviews-this is only required in the case of a plc company

Including the incorrect fellowships Acts references

Including the incorrect fellowships Acts references

Including the paragraph in the body of the Auditors report instead of as the second paragraph of the Auditor's Report

Stating that the Financial Statement consist of the Cashflow Statement and Strgl when these Reports are not included in the Financial statements-You should only consist of the relevant Reports to the single company

Including the incorrect year end

Not including the word Independent
Addressing the Auditor's report to the Directors instead of the members (they are not all the time the same persons!)
Including the incorrect year end

This consulation will be prolonged in Part C will deal with disclosure issues which arise in the Notes to the financial statements. Three further articles will be issued with regarding Accountants Reports, Statement of Directors Responsibilities and Modified Audit Opinions.

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