ECONOMYNEXT – Among proposed changes to the Sri Lankan stock exchange’s listing rules are tougher disclosure requirements on qualified audit opinions in company financial statements.
The proposed changes, on which public comments are invited, cover modified audit opinion and emphasis of matter on going concern, according to the Colombo Stock Exchange.
At present CSE listing rules do not contain any rules on action to be taken by the CSE in the event the audit opinion in the annual report is found to be a “modified audit opinion” or contains an “emphasis of matter on going concern”.
A modified audit opinion in the annual report would be a non-compliance with Rule 7.5 (a) of the CSE Listing Rules.
The CSE proposes a new rule on the Independent Auditor’s Report on the audited financial statements of listed firms which contains a qualified audit opinion.
Under the new rule, the listed firm must give to the CSE for public release an ‘impact report’ containing a detailed description on the impact of the audit qualification to the financial statements.
The impact report shall at a minimum contain cumulative impact on profit or loss, net assets, total assets, turnover/total income, earnings per share and any other financial item(s) which may be impacted due to qualified audit opinion, the CSE said.
Where the listed firm is a parent entity, the audit opinion must cover the financial statements of the group.
Listed companies will also be required make an announcement to the market via the CSE on the qualified audit opinion, stating remedial action adopted or proposed to resolve the matters set out in the qualified opinion.
The proposed changes, on which public comments are invited, cover modified audit opinion and emphasis of matter on going concern, according to the Colombo Stock Exchange.
At present CSE listing rules do not contain any rules on action to be taken by the CSE in the event the audit opinion in the annual report is found to be a “modified audit opinion” or contains an “emphasis of matter on going concern”.
A modified audit opinion in the annual report would be a non-compliance with Rule 7.5 (a) of the CSE Listing Rules.
The CSE proposes a new rule on the Independent Auditor’s Report on the audited financial statements of listed firms which contains a qualified audit opinion.
Under the new rule, the listed firm must give to the CSE for public release an ‘impact report’ containing a detailed description on the impact of the audit qualification to the financial statements.
The impact report shall at a minimum contain cumulative impact on profit or loss, net assets, total assets, turnover/total income, earnings per share and any other financial item(s) which may be impacted due to qualified audit opinion, the CSE said.
Where the listed firm is a parent entity, the audit opinion must cover the financial statements of the group.
Listed companies will also be required make an announcement to the market via the CSE on the qualified audit opinion, stating remedial action adopted or proposed to resolve the matters set out in the qualified opinion.
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