On 24 August 2018, the Institute of Singapore Chartered Accountants (ISCA) has issued a proposed audit guidance statement, new Appendix 1J in ED AGS 1, a sample independent auditor’s report (based on group audit) to guide the auditors in issuance of auditor’s reports to revised financial statements and requests for comments to be submitted by 23 September 2018.
The new Sample Independent Auditor’s Report on Revised Financial Statements (based on group audit) was needed following the introduction to new Sections 202A and 202B of the Companies Act (the Act) that allow the revision of defective financial statements under two circumstances:
- Section 202A allows directors of a company to voluntarily revise their defective financial statements without the need to obtain a court order, when it appears to the directors that the financial statements do not comply with the requirements of the Act (including compliance with the Accounting Standards).
- Section 202B provides for the Registrar to apply to the Court for a declaration that the financial statements do not comply with the requirements of the Act, and for an order requiring the directors to revise the financial statements.
The subsidiary legislation on the above sections was recently issued and set out in the new Companies (Revision of Defective Financial Statements, or Consolidated Financial Statements or Balance-Sheet) Regulations 2018 (the Regulations) require all revised financial statement to be audited and reported, unless exempted. The requirements of both sections 202A and 202B and the new Regulations took effect from 20 April 2018.
The key points to note on the report of the audit on the revised financial statements are as follows:
- The revised financial statements will be prepared on the date of the original financial statements instead of on the date of revision
- Going concern assessment will based on audit evidence obtained up to the date of the original auditor’s report.
- “Key Audit Matters” section would need to be updated as at date of auditor’s report on revised financial statements.
- “Other Information” would comprise the new Directors’ Statement or revised annual report (if applicable).
- An “Other Matter” section is included to draw attention to the disclosures in the financial statements on the aspects in which the original financial statements did not comply with the Act and the material revisions made.
More details and the sample report can be found on the ISCA’s website.
Source: ISCA, 27 August 2018