APB sparks online financial data fears
The Auditing Practices Board's new guidance on online financial data has 'opened the lid of a Pandora's box' because of the pervasive nature of the internet.
Guidelines published today by the APB aimed at clarifying the difference between online audited and non-audited financial data comes in response to the growing number of companies publishing annual financial statements on the internet.
APB chairman Ian Plaistowe, said: ‘There has been uncertainty as to what actions, if any, auditors undertake in relation to the electronic publications of their reports. The APB has issued Bulletin 2001/1 to eliminate this uncertainty.’
Under the Companies Act 1985 companies are allowed to meet their statutory reporting obligations to shareholders by distributing financial statements electronically.
But, because a company’s website can be viewed throughout the world by anyone, companies could unwittingly face legal problems in different jurisdictions. Hacking has also been raised as a major concern.
Martyn Jones, technical partner at Deloitte & Touche, said: ‘What this does is open the lid on a Pandora’s box. One issue is jurisdictional exposure that companies have. The web can be seen by anyone across the world. The relevant law may vary between countries. The [APB] guidance is recognising a bigger issue.’
Jones also cited potential problems in maintaining the integrity of a website and software adaptability.
Auditors and standard setters recognise this is an evolving topic that will need further work as issue arise.
The APB bulletin encourages auditors to check the online version of a company’s financial reports is identical in content with the signed off paper version.
Companies will also be expected to clarify the nationality of auditing and accounting standards used and limit an auditors’ association with any other information distributed with an annual report.
Bulletin 2001/1 applies to accounting periods beginning after 22 December 2000 but early adoption is encouraged.
The global accounting standard setter, the IASC, is working closely with the international club of accounting bodies, IFAC, to issue non-binding guidance in this area in spring. APB guidance on electronic reporting is believed to be the most advanced international guidance on this topic to date. However the UK standard setter expects to update its rules as progress is made in this area.
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Audit: Calls for online audit clarity