Paragraph 19A of ISA (UK and Ireland) 700 (Revised June 2013) explains disclosures that must be made in the auditor’s report for companies that are required and those that choose to voluntarily comply with, the UK Corporate Governance Code.  Companies that do not make the disclosures must explain why they have not. 

Where there is a single auditor’s report (i.e. the auditor reports on both the group and parent company financial statements are combined within a single report) and separate auditor reports (i.e. where the auditor reports separately on the group and parent company financial statements), the FRC has clarified that it was their intention that the paragraph 19A disclosures would be in relation to matters arising during the audit of the group’s financial statements.  

However they clarify that the standard was not “written to exclude the application of the requirements to the separate audit of the individual parent company financial statements” and they recognise that it may also be appropriate to identify “any relevant risks and other information required by paragraph 19A that are unique to the parent company”.  

The FRC clarify that these parent company risks and other information required by paragraph 19A should be separately identified but integrated within the combined audit report (where there is a single audit report) and within the group auditor’s report (where there are separate auditor’s reports).  

In the latter situation, the FRC comment that the parent company audit report could make reference to the disclosure in the group auditor’s report “in the other matter paragraph that refers to the separate auditor’s report on the group financial statements” in order to avoid repetition of information. 

The full clarification statement can be accessed on the FRC website.