The auditors of companies that issue preliminary results will have to ensure
that all likely audit modifications are included in prelim numbers, as part of
changes to the FSA listing regime.
The new FSA rules, which are a reaction to the EU transparency directive, no
longer make it mandatory for companies to release prelim results from 20
January. Companies that do choose to do so, however, will have to widen the
disclosures made in these announcements.
The Auditing Practices Board has updated its guidance to fit in with the new
The guidance will require auditors to give details of any likely
modification, as well as qualifications, of the auditor’s report required to be
included with the annual report.
A modification is not the same as a qualification, but does serve to bring
key issues to the attention of investors that auditors feel are important.
Auditors will also have to consider the way in which alternative performance
measures and management commentary are presented in preliminary announcements,
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.
‘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,’ said APB chairman Richard Fleck.
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