Advisory — Reporting
An independent technical read of your financial reporting package, focused on accounting, presentation, disclosure and consistency issues that commonly draw questions. You get written observations and questions for management, ranked, within an agreed scope. It is not an audit and no assurance is expressed.
A reporting package is usually built by the people who know it best, and read properly for the first time by somebody outside the team. This engagement puts that read earlier. The points that come back tend to be the ones that recur: a policy note that no longer describes what the ledger does, an estimate whose basis lives in one person’s head, a related-party list that was rolled forward, a disclosure that has not kept up with the framework, and two documents in the same annual report that do not say the same thing.
If your concern is the audit itself — the schedules, the presentation and whether the close will hold up — that is a different engagement: Audit Readiness Review. This page is about the accounting, disclosure and consistency inside the reporting package.
The revenue and receivables policy notes say one thing and the ledger does another, and you would rather correct the note or the treatment than have it found.
The receivables provision is a percentage somebody set years ago, and the audit committee has started asking how the expected credit loss was actually measured.
The cash flow statement does not explain the movements it claims to, and the Directors’ Report names a different framework from the notes.
Situations in which an independent technical read may be worth having. None of them is a requirement.
The statements and the notes exist, the numbers are broadly settled, and there is still time to change an accounting treatment or a disclosure without disrupting the close.
Points raised last year were dealt with during the audit rather than before it, and nobody has since established what in the reporting package produces them.
Impairment, expected credit losses, provisions, going concern or estimation uncertainty are material, and the basis for them has not been written down in a form somebody outside the team can follow.
The list has been rolled forward for several years, the group has changed since, and you would like completeness and disclosure considered before somebody else considers them.
Senior management or the committee has asked for the judgement-heavy accounting to be considered independently before the package is finalised.
The pack goes to the parent under IFRS while the statutory set is prepared under Ind AS, and the bridge between the two has become one person’s spreadsheet.
The work is reading, and the judgement in it is the work. There is no tool that does it.
What the policy note says, what the contracts and the transactions actually do, and what the ledger records. Where those three do not tell the same story, it is usually the note or the treatment that needs to move.
Whether the significant assumptions, the staging and assessment approach, the analysis supporting them and the resulting disclosure have been appropriately considered within the agreed scope.
Impairment indicators and the assessment behind them, provisions and contingencies, going concern and liquidity, and whether the notes explain the estimation uncertainty they are expected to explain.
Completeness of the list, classification, consistency between the underlying records and the notes, and whether the transactions and balances are disclosed in a form that stands on its own.
Recognition against the contract terms, the judgements the policy claims to apply, and the disaggregation, contract-balance and payment-term disclosures that are asked about every year.
Where Schedule III applies: presentation against the applicable Division, and the additional regulatory information that goes with it — capital work-in-progress and intangible-assets-under-development ageing, title deeds not held in the company’s name, revaluation by a registered valuer — and whether the statements, the notes and the other agreed documents agree with one another.
Where an entity reports to a parent under IFRS as well as preparing a statutory set under Ind AS, the pack and the bridge between the two can be read as part of the same engagement.
One proposition covers both frameworks. The method and the judgement areas are largely common; what differs is the layer the package is read against. An Ind AS statutory set is read against Ind AS and, where they apply, the Companies Act and Schedule III presentation and disclosure requirements. An IFRS group reporting pack is read against IFRS and the parent’s own reporting instructions. Ind AS and IFRS are not identical, and the applicable framework determines the detail of the review rather than the approach to it.
Depending on the agreed scope, the work may also consider whether the reporting documents are consistent with one another: the financial statements, the notes, the accounting policies, the Directors’ Report, annual-report disclosures, Schedule III information and other relevant reporting sections. Not every engagement covers every document, and what is in and what is out is agreed before the work starts.
The areas above are not a checklist and not an exhaustive compliance test. Financial-reporting observations and questions published by bodies such as ICAI and NFRA can inform the areas considered during the review. They are reference points for the engagement, not predictions of what a particular auditor or regulator will conclude.
Written to be worked through, not filed.
Each one states what was found, what it affects and what would resolve it, ordered so that the significant points are dealt with first. For your use, not for issue.
Where the answer turns on facts only you hold, the point comes back as a question rather than a conclusion, together with the areas that would need further technical consideration and the practical follow-up each one implies.
Forty-five minutes to work through the list, disagree with any of it, and decide what you are going to do while the package can still be changed.
It is not a statutory audit. It is not an assurance engagement, and it is not a review engagement under SRE 2400 (Revised), Engagements to Review Historical Financial Statements, or SRE 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. No opinion is given, no assurance conclusion is expressed, and nothing produced under it may be issued, filed or held out to a third party as assurance. It does not reduce the scope of your statutory audit and it is not a substitute for any part of it.
We do not prepare the statements we read, pass entries, build schedules or maintain records. And the engagement is not available to our own audit clients: Section 144 of the Companies Act 2013 lists services a statutory auditor may not provide to a company it audits, accounting and book-keeping services among them, and the restriction extends to that company’s holding and subsidiary companies.
Where the review reaches a view on how a standard applies to an entity audited by another firm, that is a second opinion within the meaning of Section 321 of the ICAI Code of Ethics: we evaluate the threats it creates, describe the limitations of the view, and seek your permission to communicate with your existing auditor before it is given.
We make no claim about what your auditor, or any regulator, will conclude, and none about preventing questions, findings or qualifications. This is professional judgement applied within an agreed scope. It is not automated compliance, and it is not a guarantee that the reporting package is complete or without error.
Already prepared, and public if you are listed. We read them and come back with what a review of this year’s package would cover.
Which framework, which entities, which documents are in and which are out, and the date the draft package will exist.
Fixed fee against an agreed scope and a fixed duration, with the boundary set in the engagement letter rather than assumed. Anything that follows from the observations is scoped and quoted separately.
CA Kiren Kumar K, FCA, ICAI membership number 223478, of Kiren & Co, Chartered Accountants, Bengaluru, FRN 031392S. The work described here draws on three years of reviewing the financial statements of entities listed on Indian stock exchanges and issuing review comments on them; on several years leading teams preparing financial statements under frameworks equivalent to IFRS and standardising audit readiness across group entities; and on eight years of statutory audit before that. More about the practice →
An independent technical read of your financial reporting package. We read the stated accounting policies against what the transactions and the numbers actually do, work through the estimates and disclosures that commonly draw questions, and check that the financial statements, the notes and the other agreed reporting documents tell a consistent story. You get written observations and questions for management, ranked, within a scope agreed before the work starts.
Neither. It is not a statutory audit, and it is not a review engagement under SRE 2400 (Revised), Engagements to Review Historical Financial Statements, or SRE 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. No opinion is given and no assurance conclusion is expressed. What you receive is a memorandum of observations for your own use, and it is not a document that can be filed, issued or relied on as assurance by anyone else.
Audit Readiness Review asks whether you are ready for the audit: presentation against the applicable Schedule III Division, whether the statements agree with themselves, and the schedules your auditor will ask for. Financial Reporting Review asks whether someone has independently read the reporting package for accounting, presentation, disclosure and consistency issues before it is finalised. Teams whose difficulty is the close and the audit process tend to start with the first; teams whose difficulty is judgement-heavy accounting tend to start with this one. If you are not sure which fits, say so in the first conversation.
Yes, where both are in scope. The method is the same and the judgement areas are largely common; what differs is the layer the package is read against. An Ind AS statutory set is read against Ind AS and, where it applies, the Schedule III presentation and disclosure requirements. An IFRS group reporting pack is read against IFRS and the parent's own pack instructions. Ind AS and IFRS are not identical, and we agree at the outset which framework applies to which part of the work.
Depending on the agreed scope. Where those documents are included, we consider whether they are consistent with the financial statements and the notes: the framework each one names, the figures each one repeats, and the disclosures that are required to appear in more than one place. Not every engagement covers every document, so what is in and what is out is agreed before the work starts.
Early enough that an observation can still be acted on. For a March year end that usually means the draft reporting package exists and has not yet been finalised. It can be done later, but an observation is worth less once the package is closed and the accounting is no longer practically open to change.
No. Section 144 of the Companies Act 2013 lists services a statutory auditor may not provide to a company it audits, accounting and book-keeping services among them, and the restriction extends to that company's holding and subsidiary companies. If Kiren & Co holds your audit, or the audit of your holding or subsidiary company, we will tell you at the first conversation and we will not take the engagement.
The draft financial statements including the notes and the accounting policies, the trial balance they were built from, the schedules supporting the significant balances and estimates, and last year's signed statements. If a group reporting pack is in scope, send the parent's pack instructions as well. If there was a long adjustment list or a query letter last year, send that too; it is usually the most informative document in the pack.
The signed set from last year tells us more in twenty minutes than a scoping call does in an hour. We will come back with what a review of this year’s package would cover, and whether it is worth doing at all in your case.