Advice on reconciliations
28 Mar 08
New advice from the Auditing Practices Board
The Auditing Practices Board (APB) has issued:
- SIR 5000 Investment Reporting Standards applicable to Public Reporting Engagements on Financial Information Reconciliations under the Listing Rules
- A paper providing feedback on the actions taken by APB in response to comments received on the exposure draft issued in June 2007.
SIR 5000 establishes investment reporting standards and guidance for accountants engaged to report publicly on reconciliations of financial information of targets to the accounting policies of an issuer to be included in a Class 1 circular under the listing rules. Such reconciliations are often referred to as “GAAP reconciliations”.
Under the listing rules, a reporting accountant is required to express an opinion as to whether:
- the financial information reconciliation has been properly compiled on the basis stated; and
- the adjustments are appropriate for the purpose of presenting the adjusted financial information on a basis consistent with the issuer’s accounting policies.
APB ISSUES BULLETIN ON PRELIMINARY ANNOUNCEMENTS
The Auditing Practices Board has issued guidance after changes in the UK and Irish listing rules.
Its Bulletin 2008/2 The Auditor’s Association with Preliminary Announcements Made in Accordance with the Requirements of the UK and Irish Listing Rules, reflects the following changes in the listing rules:
- Moving from a mandatory to a permissive regime for preliminary announcements; and
- Requiring preliminary announcements to give details of any likely modification (rather than qualification) of the auditor’s report to be included with the annual financial report.
The bulletin emphasises the need for the auditor to consider how alternative performance measures and management commentary are presented in preliminary announcements.