2.16 The Audit Committee report puts [product] provisions at [amount]; the provisions note says [amount]
UK Company A · a UK-listed medical technology group · Regulator-style question
In brief
The Audit Committee report says it agreed with [product] claim provisions of [amount] at the end of 2025 (2024: [amount]), 'included within provisions in Note 17.1'. Note 17.1 gives the [product] provision as [amount] (2024: [amount]). The [amount] gap is the same in both years and in the 2024 report, and equals the legal and other provisions due after one year, so the Committee may be including a related legal provision, but the report does not say so.
The evidence, as filed
Screenshot withheld to protect the company’s identity: Annual Report 2025, page 144; Annual Report 2024, page 133; Annual Report 2025, page 251; Annual Report 2024, page 231. Their wording or layout could lead back to the company even with names and figures masked; the evidence list below records what each page shows.
What the report shows, and what the rule requires
| What the annual report shows | What the rule requires |
|---|---|
| What the annual report shows Audit Committee report: [amount] (2024: [amount]), said to sit in Note 17.1. Note 17.1: [product] [amount] (2024: [amount]). The 2024 report showed the same [amount] gap ([amount] against [amount]). | What the rule requires One figure for the [product] provision in both places, or the Committee's figure bridged to Note 17.1 (for example '[amount] [product] provision and [amount] of related legal provisions'). |
The rule
UK Corporate Governance Code 2024, Provision 26
Version relied on: UK Corporate Governance Code, FRC, January 2024; applies to financial years beginning in or after January 2025 (Provision 29 from January 2026)
The annual report should describe the work of the audit committee, including: ... the matters set out in the Audit Committees and the External Audit: Minimum Standard
Audit Committees and the External Audit: Minimum Standard, paragraph 24
Version relied on: FRC, Audit Committees and the External Audit: Minimum Standard, [date]
The significant issues that the Audit Committee considered relating to the financial statements, and how these issues were addressed.
UK Corporate Governance Code 2018, Provision 26
Version relied on: UK Corporate Governance Code, FRC, July 2018; applies to financial years beginning from January 2019 (the 2024 edition applies from January 2025)
the significant issues that the audit committee considered relating to the financial statements, and how these issues were addressed
Why it applies here: the Committee's figure appears to add a [amount] legal provision held in the legal and other column to the [product] column.
Why it matters
A reader comparing the Committee's assurance on the [product] provision with Note 17.1 cannot tell which figure the Committee reviewed; the difference has repeated for at least two reports.
Exposure
A narrative inconsistency in the governance section; no audited figure is affected.
Our workings
the Audit Committee report states that it concurred with provisioning for [product] claims of [amount] at the 2025 year end (2024: [amount]), included within provisions in Note 17.1. Note 17.1 states a [product] provision of [amount] (2024: [amount]) and adds that it does not include legal fees for defending claims. The 2024 Audit Committee report gave [amount] (2023: [amount]) against a 2024 note figure of [amount] (2023: [amount]).
[n] - [n] = [n] and [n] - [n] = [n]; [n] - [n] = [n]. In each year the legal and other provisions due after one year in Note 17.1 are [n].
That is a reasonable basis, but the Committee's sentence points the reader to Note 17.1, where no [amount] figure or bridge appears.
| Item | 2025 [currency]m | 2024 [currency]m |
|---|---|---|
| Audit Committee report figure | [n] | [n] |
| Note 17.1 [product] provision | [n] | [n] |
| Gap: [n] - [n] = [n]; [n] - [n] = [n] | [n] | [n] |
| Legal and other provisions due after one year (Note 17.1) | [n] | [n] |
| Note figure plus that amount: [n] + [n] = [n]; [n] + [n] = [n] | [n] | [n] |
| 2024 report: [n] - [n] = [n] (2023 comparatives) | [n] |
Management’s best defence, and our reply
The Committee may have meant the whole cost of resolving [product] claims, including about [amount] of related legal provisions that the Group classifies in the legal and other column, and Note 17.1 itself says the [product] provision excludes legal fees. On that reading both figures are right, each on its own basis, and the total provisions in Note 17.1 contain the [amount]. However, the Committee's sentence sends the reader to Note 17.1 for the figure, and the note shows no [amount] amount or bridge, so the reader cannot reconcile them without the company's explanation.
The fix
- Quote the Note 17.1 figure ([amount]; 2024: [amount]), or write '[amount], being the [amount] [product] provision and [amount] of related legal provisions in Note 17.1'.
Question for the company
What does the Committee's [amount] (2024: [amount]) for [product] provisioning include beyond the [amount] (2024: [amount]) [product] provision shown in Note 17.1, and will future reports use the note figure or show the bridge?
Evidence relied on
| # | What it shows | Type | Where |
|---|---|---|---|
| 1 | The Audit Committee report gives [amount] (2024: [amount]) for [product] provisioning and points to Note 17.1 | Document | Annual Report 2025, page 144 |
| 2 | Note 17.1 gives the [product] provision as [amount] (2024: [amount]) | Document | Annual Report 2025, page 251 |
| 3 | Provisions table: [product] column [amount] at [date] | Document | Annual Report 2025, page 251 |
| 4 | Legal and other provisions due after one year are [amount] at [date] | Document | Annual Report 2025, page 251 |
| 5 | Legal and other provisions due after one year are [amount] at [date] | Document | Annual Report 2025, page 251 |
| 6 | The 2024 Audit Committee report gave [amount] (2023: [amount]) | Document | Annual Report 2024, page 133 |
| 7 | The 2024 note gave the [product] provision as [amount] (2023: [amount]) | Document | Annual Report 2024, page 231 |
| 8 | Legal and other provisions due after one year were [amount] at [date] | Document | Annual Report 2024, page 231 |
Prepared by Pramanex from the company’s published annual reports, without the company’s involvement, to show how an annual report review reads. The company is not named, and nothing on this page is a statement about any identifiable company. Observations are not an audit, review or other assurance engagement, and not legal advice. A regulator-style question is a question, not a conclusion.
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