[go: up one dir, main page]
Scribd
Upload
44 views2 pages

Lecture 5 Revision Notes-Auditor's Report

The document summarizes key reports and statements included in a company's annual filing: 1) The auditor's report examines and certifies the company's accounting records and financial position and must be filed annually with regulators. 2) The director's report contains both financial and non-financial information beyond what is in the financial statements, including donations, employee policies, director details, and future developments. 3) Group accounts consolidate a parent and subsidiary company where the parent owns a majority of the subsidiary's shares and can appoint its directors to exercise control.

Uploaded by

Anisah Habib
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
44 views2 pages

Lecture 5 Revision Notes-Auditor's Report

The document summarizes key reports and statements included in a company's annual filing: 1) The auditor's report examines and certifies the company's accounting records and financial position and must be filed annually with regulators. 2) The director's report contains both financial and non-financial information beyond what is in the financial statements, including donations, employee policies, director details, and future developments. 3) Group accounts consolidate a parent and subsidiary company where the parent owns a majority of the subsidiary's shares and can appoint its directors to exercise control.

Uploaded by

Anisah Habib
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Lecture 5 revision notes-

Auditor’s report-
Document prepared by the auditors appointed to examine and certify the accounting records and
financial position of a firm. It must be filed every year by an incorporated or registered firm (along
with its audited financial statements) with the appropriate regulatory authority. Also called audit
report.

Director report
Contains information regarding both financial and non-financial nature and goes beyond which info
is contained in financial statements

Information disclosed covers variety of topic:


Charitable/political donations
Employee’s policies
Share ownership
Details of directors and their financial interest
Principal activities and changes thereto
Acquisition by company of its own shares
Significant holdings >3% state takeover bid or say no, if no cannot takeover for a year
Post balance sheet events
Fair review of the year
Likely future developments

Group accounts
The parent company own a majority of ordinary shares of the subsidiary
Thus directors can appoint directors for subsidiary, exercising control and dictating policies

Method:
Parent company creates new company to operate particular part of its business activity; parent
company owns assets of subsidiary company
Takeovers- parent company buys majority shares in existing company

Segmental reports:
Analysis of general corporate information between separate divisions or classes of business which
are individually of economic significance
Geographical segment reporting- which provides products and services within a particular economic
environment.
Business segment- part of the business separated identified, provides individual product/service or
group related product and services

Problems with segmental reporting- identifying segment; transfer prices of goods/services between
segment’s can have substantial impact on reported profit for each segment, expenses may relate to
more than one segment, way costs are treated may hinder results.
Statements of recognised gains and losses:
The statement of total recognised gains and losses (STRGL) gives investors a summary of a
company's gains and losses regardless of whether or not they were shown in the P & L or the
balance sheet.

The starting point of the statement of total recognised gains and losses is the profit for the year
(profit after tax, before the payment of dividends) and this is followed by other gains and losses —
changes in the value of items shown on the balance sheet.
The prior year adjustment is a change in profit in the previous year due either to an error or (more
likely) a change in accounting policy (to bring reporting in line with current accounting standards).
This prior year adjustment should include the cumulative effect over all prior years.

The gains and losses made for the period do not completely explain all changes in shareholders'
equity. This is because shareholders’ funds are also changed by share buybacks, new issues and
dividends.

The STRGL helps prevent an important class of manipulations of accounts. By requiring that all
changes to the balance sheet are shown, it highlights any attempt to move losses to the balance
sheet without passing them through the P & L. It may not provide as much material for analysis as
the other primary statements, but it should still be looked at.

Chairmen report
Is a report containing a personal statement and overview of the company strategy , it isn’t audited
and happens to be optimistic.

You might also like