Company websites are being used by more and more people seeking financial information on which to base investment decisions. Watchdogs are acting to force companies to make clear what information is independently audited and what's not.
Fears that the line between audited and non-audited online financial information is being increasingly blurred have led accountancy watchdogs to draft guidance outlining the responsibilities of management and auditors.
An auditor’s report is traditionally published as part of the hard copy paper annual accounts. Now companies post this information online but it is mixed in with interims, quarterly reports and press releases. Because a website is seamless, auditors and standard setters fear users of financial data could confuse audited and non-audited information.
The issue emerges at a time when the issue of company information and transparency has never been of more importance, especially to businesses like British Telecom which was judged to have been one of the best providers of data to the company’s investors when it published its results last year.
Gerry Acher, head of the ICAEW’s audit and assurance faculty, said the ‘time was ripe for a study and guidance’ to be issued, although he had not heard of a case where an individual had bought shares based purely on information gleaned from a company’s website.
‘It’s a case that is going to come. Auditors are concerned and controls are needed,’ he said.
Global standards watchdog the IASC is set to issue non-binding guidance in the spring stating any internal control systems in place for paper publications must exist for electronic publications as well.
Colin Fleming, project manager at the IASC, said: ‘Any financial information, press releases, analysts’ reports should undergo the same rigorous controls that occur in the paper environment as in the electronic environment so that it’s clear to the user the information with which the auditor is associated.’
The IASC is working closely with IFAC, the global club of accountants, to develop the guidance which will also target directors and audit committees.
The UK’s Auditing Practices Board is also drafting guidance on the matter to be published at the end of January.
Jon Grant, technical director of the Auditing Practices Board, said: ‘It is unclear as to what an auditor’s opinion relates to in financial reports on corporate websites or whose responsibility it is to make sure information goes on a website and stays accurate.’
BT’s results can be found on the company’s website at www.bt.com
For more information about national and international audit guidance visit www.apb.org.uk or www.iasc.org.uk.