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Accountants’ reports on profit forecasts: regulation and practice

Accountants’ reports on profit forecasts: regulation and practice Profit forecasts are rarely disclosed in the UK except in prospectuses, circulars and during takeover bids. There are few regulations governing the content of profit forecasts. Under stock exchange rules these forecasts must be reported on by both reporting accountants and the merchant bankers advising on the deal. The format of the forecasts is at the discretion of individual companies. This paper summarises the regulations, including professional pronouncements, governing accountants' reports on profit forecasts. Practical examples of such accountants' reports extracted from 250 profit forecasts published during 701 UK takeover bids in the period 1988 to 1992 are reproduced and discussed. These examples provide useful precedent material for practitioners involved in reporting on a profit forecast. The paper concludes with a discussion of policy issues and suggestions for policy makers. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Managerial Auditing Journal Emerald Publishing

Accountants’ reports on profit forecasts: regulation and practice

Managerial Auditing Journal , Volume 15 (9): 12 – Dec 1, 2000

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Publisher
Emerald Publishing
Copyright
Copyright © 2000 MCB UP Ltd. All rights reserved.
ISSN
0268-6902
DOI
10.1108/02686900010356923
Publisher site
See Article on Publisher Site

Abstract

Profit forecasts are rarely disclosed in the UK except in prospectuses, circulars and during takeover bids. There are few regulations governing the content of profit forecasts. Under stock exchange rules these forecasts must be reported on by both reporting accountants and the merchant bankers advising on the deal. The format of the forecasts is at the discretion of individual companies. This paper summarises the regulations, including professional pronouncements, governing accountants' reports on profit forecasts. Practical examples of such accountants' reports extracted from 250 profit forecasts published during 701 UK takeover bids in the period 1988 to 1992 are reproduced and discussed. These examples provide useful precedent material for practitioners involved in reporting on a profit forecast. The paper concludes with a discussion of policy issues and suggestions for policy makers.

Journal

Managerial Auditing JournalEmerald Publishing

Published: Dec 1, 2000

Keywords: Accountants’ profit forecasting; Mergers and acquisitions

References