Discussion Documents: REVIEW OF FINANCIAL REPORTING BY ISSUERS - CYCLE 5


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REVIEW OF FINANCIAL REPORTING BY ISSUERS - CYCLE 5

Other matters

Common non-disclosures

99.

A number of common non-disclosures were found in Cycle 5. Disclosures required by SSAP-22 and FRS-30 were poor.

SSAP-22: Related Party Disclosures

100.

The following related party non-disclosures were noted:

(a)

three issuers failed to disclose the value of transactions with related parties (SSAP-22 (para. 5.1(c)).

(b)

one issuer also failed to disclose the outstanding balance and terms of settlement (SSAP-22 (para. 5.1(d))).

(c)

another issuer failed to identify each related party and the value of related party transactions (SSAP 22 (para. 5.1(c))).

101.

The Commission reminds issuers to provide the relevant related party disclosures so that the requirements of SSAP-22 are met.

FRS-30: Reporting Share Ownership Arrangements Including Employee Share Ownership Plans (ESOP)

102.

The Commission found that the following disclosures were not been made by one or more issuers:

(a)

who was entitled to participate in the ESOP (FRS-30 (para. 5.1(a));

(b)

the percentage of shares held by the ESOP (FRS-30 (para. 5.1(b));

(c)

the rights of the entity or its related parties to acquire shares held by the scheme (FRS-30 (para. 5.1(d)); and

(d)

the disclosure of all persons and entities that control the ESOP (FRS-30 (para. 5.2).

103.

Where there is more than one scheme in operation, entities are encouraged to clearly distinguish them in the annual report.

104.

The requirements of this standard provide users of financial reports with important information on share ownership arrangements, particularly where there are ESOPs.

Minor matters

105.

Minor matters identified were:

FRS-1: Disclosure of Accounting Policies

non-disclosure of an accounting policy for research and development.

FRS-9: Information to be Disclosed in the Financial Statements

non-disclosure of fees paid to auditors for other services provided to the issuer;
incorrect exclusion of interest revenue from the total operating revenue figure; and
material gain from sale of fixed assets not separately disclosed in the statement of financial performance or notes to the financial statements.

FRS-10: Statement of Cash Flows

non-disclosure of reason for netting certain cash flows.

SSAP-18: Leases

unguaranteed residual values of leased assets not disclosed;

SSAP-23: Financial Reporting for Segments

non-disclosure of segment assets; and
non-disclosure of the fact that the issuer operates predominantly in one industry.

FRS-31: Disclosure of Information by about Financial Instruments

non-disclosure of concentration of credit risk.

FRS-33: Disclosure of Information by Financial Institutions

interest expense not disclosed for each of the different classifications of funding presented in the statement of financial position.

FRS-36: Accounting for Acquisitions Resulting in Combinations of Entities or Operations

non-disclosure of an acquisition during the year in the investor's consolidated financial statements.

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