Financial Reporting zone

Financial reporting briefs: February 2008

The Auditing Practices Board has today issued a bulletin on the auditor’s relationship with preliminary announcements as per the new UK and Irish listing rules.

The updated guidance reflects the move from a mandatory to a permissive regime for the publication of preliminary announcements, and the requirements for such “prelims” to give details of any likely modification (rather than qualification) of the auditor’s report in the annual accounts.

The Bulletin also re-emphasises the need for the auditor to consider the way in which
non-statutory information such as alternative performance measures and management
commentary are presented before agreeing to their release.

“If a company decides to make a preliminary announcement it will be the first
public communication of that company’s full year results and, as such, will be a
focal point for investor interest,” said Richard Fleck, APB chairman. “By agreeing to the announcement prior to publication, auditors have an important role to play in the orderly release of preliminary statements of annual results.”

The bulletin can be downloaded free of charge from the APB’s website here.

11 February - Mike Fogden completes term as chair of the Accountancy and Actuarial Discipline Board

Mike Fogden CB, chair of the Accountancy and Actuarial Disciplinary Board (AADB), formerly the Accounting Investigation and Disciplinary Board (AIDB) has decided not to seek re-appointment.

Under the newly re-structured FRC, it was agreed that chair of the operating bodies should in future be ex officio members of the new FRC board, and current chairs should decide whether
they wish to be considered for further tenure.

Most recently ( in August and October 2006 respectively) the AIDB has launched an investigation into the auditors of MG Rover, Deloitte and Touche, and the auditors of iSoft Group, RSM Robson Rhodes. Most famously, perhaps, it filed disciplinary complaints about Mayflower’s former finance director David Donnelly and Mayflower’s auditors, PricewaterhouseCoopers in September 2005. After a decision by the International Dispute Resolution Centre last year, both complaints were dropped and the FRC faced legal costs of £1.4 million.

Fogden has agreed to continue as chair beyond the end of his present tenure on 31 March 2008 until his successor can take over.

Previous financial reporting briefs:

January 2008
December 2007
November 2007
October 2007
Septmeber 2007
August 2007
July 2007