New requirements when signing an auditors’ report
Companies Act 2006 specifies new requirements when signing auditors’ reports for financial years starting on or after 6 April 2008. The new requirements are outlined in sections 503 to 506 of the 2006 Act.
Under the provisions of Section 503 of the 2006 Act where the auditor of a company is a firm, as opposed to an individual, the report must be signed by the senior statutory auditor in his own name, for and on behalf of the auditing firm and dated. Under the provisions of the 1985 Act the auditor’s report had to be signed in the name of the auditing firm by a person authorised to sign on its behalf.
Section 504 states that the senior statutory auditor means the individual identified by the firm as senior statutory auditor in relation to the specific audit. The Audit Practices Board’s bulletin 2008/06 clarifies the meaning of the term senior statutory auditor as the same as that of engagement partner used in the International Standards on Auditing.
The senior statutory auditor signing the auditor’s report must be a person eligible for appointment as auditor of the company. A person is eligible for a statutory auditor appointment if he is a member of a recognised supervisory body and is eligible for appointment under the rules of that body. An ACCA member will therefore need to hold an audit practising certificate to be named as a senior statutory auditor for an engagement.
Under section 506 of the 2006 Act there are some circumstances in which the names of the auditor and that of the senior statutory auditor may be omitted. The circumstances are those of a serious risk of violence or intimidation faced by the auditor or by the senior statutory auditor. In such cases the company must pass a resolution that the names should be omitted from the auditor’s report and the Secretary of State needs to be notified.
There are a few practical issues relating to the correct way a senior statutory auditor should sign the report. The general directions from ACCA are that the name printed on the auditor’s report should be the same full name as stated on the senior statutory auditor’s practising certificate, which is the same name included in the ACCA members’ register. In the circumstances in which the senior auditor is known by his/her middle name, by an abbreviation of his/her full name or when the middle names or initials are not used in his/her customary signature, the senior statutory auditor can still use his/her normal signature even if that does not coincide with the full name printed in the auditor’s report. If for example the full name of an auditor, as stated in his practising certificate, is John James Smith but he is known as Jim and he usually signs as JJ Smith, he may still use his customary signature above his full printed name on the auditor’s report.
An example of the correct signature of an auditor’s report is reproduced below.
In our opinion:
- the financial statements give a true and fair view of the state of the company’s affair as at … and of its profit for the year then ended;
- the financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice;
- the financial statements have been prepared in accordance with the Companies Act 2006; and
- the information given in the Directors’ Report is consistent with the financial statements.
JJ Smith Address
John James Smith FCCA Date
(Senior Statutory Auditor)
for and on behalf of ABC LLP, Statutory Auditor