Section 266(1): Duty to report to members
The auditor must report to the members (shareholders) on:
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the company’s financial statements (and consolidated financial statements, if any); and
- the company’s accounting and other records related to those financial statements.
In that report, the auditor must state an opinion on whether the financial statements are:
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properly drawn up to give a true and fair view of the company’s financial position and performance,
- prepared in accordance with the Companies Act 2016, and
- prepared in accordance with the approved accounting standards. SSM+1
Section 266(2): Duty to report on records
The auditor must also state in the report whether:
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proper accounting and other records (including registers) have been kept by the company as required by the Act; and
- in the case of a group, whether proper returns from branch offices are adequate, and whether the consolidation methods used for group (holding/subsidiary) accounts are appropriate. Register Company+2YYC Advisors+2
Section 266(3): Duty to highlight problems
The auditor must form an opinion on, and state in the report:
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whether they obtained all the information and explanations they required;
- any defect or irregularity in the financial statements or consolidated financial statements;
- any matter not disclosed in the financial statements that is necessary for a true and fair view; and
- if they are not satisfied with any of the above, the auditor must give the reasons. Register Company+2YYC Advisors+2
How to memorise fast:
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266(1) = opinion on financial statements (true & fair + compliance)
- 266(2) = proper records kept? (company / branches / consolidation)
- 266(3) = red flags (info obtained? any defects? any missing disclosure? give reasons).
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