management company accounts - unquallified

dade

not sure if this is the correct spot but here goes.

our management company AGM is tonight and it was mentioned to me that the accounts that where provided are unqualified.

can anyone explain what this means and the implications?

Past30Now

dade wrote: »

not sure if this is the correct spot but here goes.

our management company AGM is tonight and it was mentioned to me that the accounts that where provided are unqualified.

can anyone explain what this means and the implications?

Where an auditor audits a set of Financial Statements he is required to give an opinion on a number of aspects of the financial statements. An unqualified opinion is, in essence, in agreement with the Financial Statements. A qualified opinion is a negative opinion. Generally, you would expect most financial statements to be unqualified.

This is far removed from a technical answer but basically an unqualified opinion is a good thing.


Past30

dade

ok cool and what would the implication be if it where qualified?

Nanoc

Basically they wouldn't sign the accounts. This would be is they thought they didn't give a True and Fair view or they thought that there was fraud or serious error.

it's good.

dade

cheers guys, the statement says it's a true and fair view but they include something called an Emphasis of Matter - going concern.

at the moment the company is in deficit, the directors put this down to the fact that some houses join the estate later in the year and everything will be Rosie once that cash and the cash from non paid fees comes in.

so i guess that's what the guy meant when he said they are unqualified but one thing i have noticed is there is no physical signature or date by either a director or one of the auditor, would this just be an oversight coz they had 500 members

kluivert

I havent done an audit in two years but there are a number of audit reports for which the auditors will provide.

Some guys in Audit will explain more but they are split into two groups

Unqualified - the financial statements reflect a true and fair position of the performance of the company in the trading year.

Unqualified can be split further. Cant remember them fully, but there is one that makes reference to the inherent risk (envirnomental business risk) of the company - that while the company is doing well, the industry in which the company operates is in a downturn and thus the financial results of this reporting period may not be a true reflect of future reporting periods.

Qualified - the financial statements DO NOT reflect a true and fair position of the performance of the company in the trading year.

Qualified is then further split into three categories.

1. Limitation of Scope - there was insufficent evidence available to complete the audit tests in order to determine the truth and fairness of the financial statements.

I cant remember the last two.

Newaglish

dade wrote: »

cheers guys, the statement says it's a true and fair view but they include something called an Emphasis of Matter - going concern.

at the moment the company is in deficit, the directors put this down to the fact that some houses join the estate later in the year and everything will be Rosie once that cash and the cash from non paid fees comes in.

so i guess that's what the guy meant when he said they are unqualified but one thing i have noticed is there is no physical signature or date by either a director or one of the auditor, would this just be an oversight coz they had 500 members

Audit Reports:

Unqualified: Accounts give a true and fair view of the company's postition

An accountant may qualify an audit report for the following reasons:

Qualified - Except for Limitation of Scope
Accounts give a true and fair view except for one individual item for which there is not enough evidence for the auditor to determine whether or not that figure is correct

Qualified - Except for Disagreement
Accounts give a true and fair view except for one individual item which the accountant believes is incorrect

Qualified - Disclaimer
Similar to limitation of scope except there is such a lack of evidence that the accountant cannot give an opinion as to whether the financial statements are correct or not

Qualified - Adverse
Similar to disagreement except the materiality of incorrect items in the financial statements is so high that the statements do not give a true and fair view

An emphasis of matter - going concern paragraph is added by the auditor in situations where the auditor believes it is a distinct possibility that the company would not be viable in the future and may be wound down in the future.

While it doesn't necessarily mean alarm bells and jump ship, it's something to take note of as it's not a good sign and you'd certainly want to review whether or not your investment is safe and would maybe be better off elsewhere.

PS. I'm not actually an auditor so i'll add my own little disclaimer at the end!

dade

Newaglish wrote: »

An emphasis of matter - going concern paragraph is added by the auditor in situations where the auditor believes it is a distinct possibility that the company would not be viable in the future and may be wound down in the future.

While it doesn't necessarily mean alarm bells and jump ship, it's something to take note of as it's not a good sign and you'd certainly want to review whether or not your investment is safe and would maybe be better off elsewhere.

can'y jump ship, it's a managemnet company, seems most of the residents haven't paid up and the co is in the red