Reg­u­la­tor crit­i­cises work of UK au­di­tors when it comes to an­nual re­ports


AU­DI­TORS such as KPMG and Price­wa­ter­house­Coop­ers (PwC) must do bet­ter when it comes to com­pil­ing a key part of com­pa­nies’ an­nual re­ports, their UK reg­u­la­tor warned.

The “Other In­for­ma­tion” sec­tion is of­ten in­ad­e­quate and doesn’t meet the same stan­dards as other parts of the re­port, even though it con­tains in­for­ma­tion vi­tal to in­vestors, the Fi­nan­cial Re­port­ing Coun­cil (FRC) said. The reg­u­la­tor told au­di­tors to im­ple­ment bet­ter pro­ce­dures and tar­gets and to place more em­pha­sis on non-fi­nan­cial in­for­ma­tion.

The re­port is the lat­est blow to an in­dus­try that’s been crit­i­cised for al­leged fail­ings in the global fi­nan­cial cri­sis and in cor­po­rate collapses such as this year’s Car­il­lion liq­ui­da­tion.

Much of the prob­lem arises from mis­un­der­stand­ings, the FRC said. The opin­ion that an au­di­tor pro­vides on a re­port’s fi­nan­cial state­ments doesn’t cover the “Other In­for­ma­tion” sec­tion, some­thing that in­vestors of­ten don’t re­alise, ac­cord­ing to the reg­u­la­tor. The FRC said it would look at whether au­di­tors should be re­quired to take more re­spon­si­bil­ity for the in­for­ma­tion in this sec­tion.

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