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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

Niamh Brennan; Sidney J. Gray
Managerial Auditing Journal , Volume 15 (9): 12 – Dec 1, 2000
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12 pages

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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 Journal – Emerald Publishing

Published: Dec 1, 2000

Keywords: Accountants’ profit forecasting; Mergers and acquisitions

References

  • Reports by Auditors under Company Legislation in the UK
    Auditing Practices Board
  • Investment Circulars and Reporting Accountants, Statement of Investment Circular Reporting Standard No. 100
    Auditing Practices Board
  • Voluntary disclosure of profit forecasts: factors influencing information disclosed during UK takeover bids
    Brennan, N; Gray, S.J
  • Rhetoric and Argument in Financial Reporting: Disclosures in Profit Forecasts and Takeover Documents
    Brennan, N; Gray, S.J
  • Guidelines for Accountants Investigating and Reporting for the Purpose of Acquisitions, Disposals and Prospectuses
    Carter, W.G.K; Morland, D.P
  • Accountants’ Reports on Profit Forecasts
    Deloitte Haskins & Sells
  • Accountants’ Reports on Profit Forecasts
    Institute of Chartered Accountants in England and Wales (ICAEW)
  • Prospective Financial Information. Exposure Draft of Auditing Guideline
    Institute of Chartered Accountants in England and Wales (ICAEW)
  • The Listing Rules
    London Stock Exchange
  • The City Code on Takeovers and Mergers
    Panel on Takeovers and Mergers