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Press Release

Friday 12 October 2012

IMA: INVESTORS WANT MORE INFORMATIVE AND CLEARER AUDIT REPORTS

The Investment Management Association (IMA) welcomes the proposals put forward by the International Auditing and Assurance Standards Board (IAASB) on auditor’s reports, which address the need to make them more relevant and useful for investors.

Liz Murrall, IMA Director of Corporate Governance and Reporting, said:

“IMA members are major investors - on behalf of retail and institutional clients - in companies that trade on regulated markets. Therefore our industry has a real interest in the requirements governing the audits of these companies’ accounts and the auditor’s report.

“Currently investors are concerned about the quality of audits and feel excluded from the process and real findings, such as the evaluation of risk and controls. They would value a more far-reaching audit report and we therefore welcome the opportunity to comment on the IAASB’s paper.”

In its response, the IMA says that the audit report is the only communication investors have with the auditor but currently it has limited benefits, containing a binary opinion and technical language.

A particular concern is the opaque nature in which accounts are prepared and audited. The IMA agrees that there should be a holistic approach to corporate reporting which needs to involve the company’s board, audit committee and auditor. However it recognises that there are no international standards on the responsibilities of the auditor committee and supports the enhanced disclosure guidelines for boards and/or audit committees developed by the Global Auditor Investor Dialogue*.

The IMA also supports IAASB’s idea of having an ‘Auditor’s Commentary’ section in the report to provide more insight to users. This will help investors’ confidence in the auditor’s work and trigger questions which need to be posed to management.

However, investors want more assurance from the auditor on the going concern assessment – the underlying assumption in the preparation of the financial statements that the business is not about to go broke. Auditors should state any doubts over the company’s ability to continue as a going concern, regardless of whether the information has been disclosed by management. 

-ENDS-

* IMA is a part of the Global Auditor Investor Dialogue which recognises the need to restore confidence in the current economic climate and sees enhanced disclosures relating to accounting, audit and risk controls as having a pivotal role in achieving this.

For further information please contact:

Mona Patel, Head of Communications
mpatel@investmentuk.org
020 7831 0898 or 07834 089332

Navdeep Sidhu, Press Officer
nsidhu@investmentuk.org
020 7831 0898 or 07843 517 618

Christina Bridge, Press Assistant
cbridge@investmentuk.org
020 7831 0898

About the Investment Management Association

  • The IMA is the trade body for the UK's £4.2 trillion asset management industry (retail and institutional) which is one of the world's leading investment management centres.
  • Our role is to represent the interests of the asset management industry to government and regulators both in the UK and internationally.
  • The money our members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.

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