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Audit reports – other reports under the Companies Act 2006. Storyboard for. …clear thinking. By completing this module you will be able to: Describe the circumstances when additional reports are required from auditors by statute
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Audit reports – other reports under the Companies Act 2006 Storyboard for
By completing this module you will be able to: Describe the circumstances when additional reports are required from auditors by statute Explain the purpose of these reports and how company law is protecting shareholders and others dealing with a company At the end, you can visit useful Internet sites on a “Web Ride” Lecturer: David Duvall Learning time: approx. 15 mins. How to use this learning module? - Click on "Help" in the Table of Contents (TOC) Audit reports – other reports under Companies Act 2006 Graphic: [presenter or standard graphic]
s92 Re-registration of a company from private to public s519 Auditor ceasing to hold office s593 Public company allotting shares otherwise than for cash s599 Transfer of non-cash assets by members to a public company s714 Private company purchasing or redeeming shares out of capital s837 Statement on a company’s ability to make a distribution where the audit report is qualified Companies Act 2006 references Graphic: [CCH book on Companies Act 2006]
A company’s auditor must: make a written statement that the company’s net assets amount to no less than (called-up share capital + undistributable reserves) have issued an unqualified report on a balance sheet which is no more than 7 months old (or qualified if the qualification is not material for determining the amount of net assets) Re-registration – private to public company Graphic: [Alternative investment market logo]
Unquoted companies The auditor must deposit at the company’s registered office: either a statement of the circumstances relating to the cessation, or a statement that there are no circumstances that need to be brought to members’ attention Quoted companies The auditor must deposit at the company’s registered office a statement of the circumstances relating to the cessation (cannot state that there are no circumstances) Auditor ceasing to hold office Graphic: [business person walking away from an office with a briefcase]
If a company allots shares for a consideration other than cash, it must during the 6 months before the date of allotment obtain a report on the value of the asset(s) to be received: from the company’s auditor, or from a similarly qualified independent accountant The auditor/ accountant may make use of a report by an expert valuer Guidance on using experts is in ISA 620 Using the work of an expert The report is made to the company itself and must not be qualified Public company allotting shares for non-cash assets Graphic: [money weighing machine]
In the first 2 years from receiving its trading certificate, a public company may not receive a non-cash asset from any subscriber to its memorandum unless: the terms of the transfer have ben approved by an ordinary resolution of the members it obtains a report on the value of the asset(s) to be transferred: from the company’s auditor, or from a similarly qualified independent accountant There are similar rules about the use of experts to those for allotting shares for non-cash assets (previous screen) The report is made to the company itself and must not be qualified Public company receiving non-cash assets from its members Graphic: [a rusty old car]
Private companies may purchase/ redeem shares and reduce overall capital only if the following requirements are met: special resolution of the members statement by the directors that the company is solvent and specifying the amount of the permissible capital payment (PCP) report by the auditors to the directors that: they have enquired into the company’s state of affairs the PCP has been properly determined they are not aware that the directors’ opinion on the company’s solvency is unreasonable the auditor’s report must not be qualified Private company purchasing or redeeming shares out of capital Graphic: [a private company Share certificate]
If a company’s last annual accounts, used as relevant accounts for a distribution, have a qualified audit report, the auditor must make a statement as to: whether the subject-matter of the qualification is material for determining the legality of the distribution Normally this means whether the auditor believes that the company’s distributable profit may be below the level required for the distribution Distribution of profits – qualified audit report Graphic: [a cake being sliced]
The key things to remember from this module are: auditors need to be aware of the need for reports over and above their usual report on a company’s accounts the specific circumstances when a further report may be needed the Companies Act requirements surrounding these reports, which auditors are likely to have to explain to company clients Summary Graphic: [standard summary graphic]
Please select the correct answer(s) and then click on “Submit” What is the requirement for net assets if a private company re-registers as public? The amount must be not less than called-up share capital The amount must be not less than called-up share capital plus reserves The amount must be not less than called-up share capital plus undistributable reserves The amount must be not less than called-up share capital plus distributable reserves Question 1
Please select the correct answer(s) and then click on “Submit” The auditors of a quoted company are being replaced by another firm. Which of the following is true? They must deposit a statement of circumstances at the company’s registered office They must deposit a statement of circumstances at the company’s registered office or a statement that there are no circumstances They must deposit a statement that there are no circumstances They need not deposit a statement as they are not resigning voluntarily Question 2
Please select the correct answer(s) and then click on “Submit” When a company makes a distribution of profits, in what circumstances must the auditors make a report in addition to their report on the annual accounts? When the company has made an illegal distribution When the company has made a loss When the company is exempt from audit When the auditors have issued a qualified report on the annual accounts Question 3
Now you have finished this module and acquired basic knowledge on further reports required by statute from companies’ auditors If you answered all the questions in the Quiz correctly, you can print out your personal certificate by clicking on the link Thank you for your attention! Finish Graphic: [standard finish graphic]
