Auditing and Assurance Standards and Guidance

FRC Bulletins

Bulletin: Compendium of illustrative auditor's reports on United Kingdom private sector financial statements for periods commencing on or after 17 June 2016

Auditor's reports where consolidated financial statements are prepared

Alternative presentation options of the financial statements of a group

47.	Group and parent company financial statements may be prepared in accordance with different financial reporting frameworks (for example IFRSs as adopted by the EU used for the group financial statements and UK GAAP used for the parent company financial statements).

48.	Where the financial statements of the group and the parent company are presented in accordance with different financial reporting frameworks the financial statements might be presented separately within the annual report and in such circumstances separate auditor's reports might be provided.28

49.

Where separate auditor's reports are provided on the group and parent company financial statements, the requirements of ISA (UK) 701 still apply to each separate auditor's report. Therefore, key audit matters and other audit planning and scoping matters are required to be communicated in respect of both the group and the parent company audits. The auditor may be able to avoid unnecessary duplication in respect of the auditor's reporting responsibilities by incorporating into the auditor's report by cross-reference the location of where such information can be accessed, so long as that cross-referenced material is readily accessible. However, there is certain information required by law or regulation that must be included in the auditor's report to which the financial statements relate.29

50.	Appendices 2, 4 and 6 illustrate an auditor's reports where the report on the group financial statements and the report on the parent company financial statements are presented as a single auditor's report.

51.

Appendix 7 illustrates auditor's reports where the group and the parent company financial statements are presented separately. In such cases, the auditor might provide separate auditor's reports on the group financial statements (see Appendix 7A) and on the parent company financial statements (see Appendix 7B).

52.	Where separate auditor's reports are provided on the group and parent company financial statements the illustrative examples assume that:

The auditor's responsibilities with respect to the corporate governance statement are reported on in the auditor's report on the group financial statements;

The auditor's responsibilities with respect to the UK Corporate Governance Code are reported on in the auditor's report on the group financial statements; and

The directors' remuneration report is reported on in the auditor's report on the parent company financial statements.

However, other approaches may be adopted.

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