| 17. | The reporting accountant should: |
| (a) | Obtain an understanding of the purpose of the investment circular; |
| (b) | Ascertain which financial reporting framework is required to be used by the applicable regulations and which, if any, accepted conventions as to the preparation and presentation of historical financial information for inclusion in investment circulars are to be applied4; and |
| (c) | Review the appropriateness of the accounting policies |
| in order to determine whether the proposed historical financial information prepared by the issuer is capable of giving a true and fair view, for the purposes of the investment circular. (SIR 2000.2) |
| 18. | Where historical financial information is presented in a prospectus the Prospectus Rules generally determine the applicable financial reporting framework. The Prospectus Rules require the most recent year's financial information to be presented in a form consistent with that which will be adopted in the issuer's next published annual financial statements, having regard to the accounting standards, policies and legislation applicable to such annual financial statements. |
| 19. | The reporting accountant satisfies itself that the directors have performed a thorough review of the accounting policies used in preparing the historical financial information in determining the accounting policies appropriate for the business following the transaction that is the subject of the prospectus. The reporting accountant also considers whether the policies are consistent with the applicable financial reporting framework, and accounting policies used in the relevant industry. Where the reporting accountant does not agree with the directors' final proposed accounting policies they refer to the guidance on reporting set out in paragraphs 70 to 76 of this SIR. |
| 20. | Where information is presented in a Class 1 circular, the suitable criteria regarding its presentation are those set out in the Listing Rules. These rules require financial information to be presented in a form consistent with the accounting policies adopted in the issuer's latest annual consolidated accounts. |
| 21. | The directors have regard to, and make appropriate disclosure of, accepted conventions which have been developed for the preparation and presentation of historical financial information in investment circulars (including those relating to additional disclosures). These conventions have been developed to assist the directors, to the extent consistent with established accounting principles, to fulfil the criteria set out in the relevant regulations, present the information in an easily analysable form, and give a true and fair view for the purposes of the applicable investment circular. |
| 22. | The Annexure provides a summary of these conventions including, among others, conventions that address: |
| Making adjustments to previously published financial statements and dealing with entities which have not previously prepared consolidated accounts. |
| Carve outs. |
| Acquisitions. |
| Newly-formed issuers. |
| In certain circumstances applying the conventions may result in combined or aggregated, rather than consolidated, financial information being presented in order to meet the requirement to present financial information that gives a true and fair view, for the purposes of the investment circular. |
| 4 See Annexure. |
 |
Licence and copyright | © 2018, LexisNexis Group a division of Reed Elsevier (UK) Ltd. All rights reserved. |