There have been a number of recent developments in UK Company Law and auditing standards that affect the auditor’s duties and the wording of auditor reports in the UK. This new legislation encourages directors to present information which is relevant to the company which meets shareholders’ needs.

Some of these changes include:

  • The introduction of the strategic report (to be presented separately to the directors report)
  • Changes to ISA 700 as a result of the above

The Strategic Report

  • The directors of a UK company must prepare a strategic report each financial year of the company, unless the company is entitled to the small companies’ exemption
  • The purpose of this report is to inform members of the company and help them assess how the directors have performed their duty to promote the success of the company
  • The report must contain a fair review of the business, description of principal risks and uncertainties facing the company, analyse the company’s performance and position using financial KPI’s and future outlook
  • The business review must detail the development and performance of the company’s business during the year and the position at the end of the financial year. It should be consistent with the size and complexity of the business.
  • The report is to be approved by the board of directors and signed on behalf by a director or secretary of the company
  • Applicable for financial years ending on or after 30 September 2013

As a result of the above there have been some changes noted in the directors’ report

  • No longer a requirement for a business review
  • No longer requires a statement of principal activitie

Effect of above changes on the auditor’s report

  • Auditor must state in his report whether the information given in the strategic report is consistent with the financials (as is already the case with the directors’ report)
  • Where the company has taken advantage of the small companies exemption from the requirement to prepare a strategic report the auditor must state this fact in his report

If you require more information on how this will affect your company please do not hesitate to contact us on 01-2804731 or via email at . Guidance can also be found at

The opinions set out above are personal to the writer and the information should not be depended upon as legal advice.