The contents of the Accountants Report for the purposes of a prospectus are:
i. Title of report and identification of the reporting accountants, with details of their address.
ii. Addressee - usually the Director of the company.
iii. Report with the following information:
a) Examination of audited accounts of the company for the years required, Report on proposed issue stating number of shares and nominal value.
b) The accounts have been prepared in accordance with generally accepted accounting practices. The accounting policies used disclosed.
c) Whether reporting accountants have also been auditors of the company, if not the auditors are mentioned.
d) Whether any accounts have been made up for submission to the members subsequent to previous balance sheet.
e) Opinion on truth and fairness of the accounts;
f) Significant accounting policies that have been used in preparation of the accounts;
g) Profit and Loss Accounts for the last five years that must show earnings per share, profit before taxation, taxation and extra-ordinary items, directors emoluments.
h) Latest balance sheet.
i) Capital commitments and contingencies not provided for.
j) Date of report, signed.
b) Provision is made for disclosure of the adjustments made by reporting accountants in arriving at the information included in the report. The purpose of these adjustments is to reflect past results in future conditions so far as these are known. This is a reasonable principle acceptable under the third schedule provisions. As a result of these adjustments it may be difficult to reconcile reported figures with those in the past published accounts of the company.
The published stewardship accounts are prepared by a company's directors for presentation to committed shareholders in order to acquaint them with the result of the company's activities during the last complete year of stewardship. There is no over-riding need for the accounts to be comparable and consistent with each other. In a prospectus, the information is addressed to potential investors in such a way as to enable them to form an opinion on the likely prospects of the company under future trading conditions so far as they can be assessed. The purpose must be met, consistency and comparability must be achieved but also future conditions must be taken into consideration
Examples of situations in which adjustments would be appropriate are:
i. Income and/or expenditure which has arisen in the past, but which it is known will not arise in the future may be eliminated, e.g. nationalised subsidiaries, uninsured losses, extra-ordinary items etc.
ii. Revaluation of assets causing a change in depreciation charges. This should be adjusted only if revised figures can be produced with reasonable certainty otherwise it may be preferable to explain the position in a note to the accounts.
iii. A significant change in accounting policies at any point during the period reported on, in which event the accounts for all affected periods should be adjusted to reflect the accounting policies which are known to be applicable in the future.