1.16 Two Company notes give different figures for the expected credit loss provision brought forward on amounts due from subsidiaries
UK Company B · a UK-listed technology and logistics group · Presentation point
In brief
The key estimates note says the [amount] expected credit loss [wording masked], while Note 3.2 says the [amount] [wording masked]. The 2024 report gave the provision at [date] as [amount], so the key estimates note misstates it. Neither note now states the closing provision, which on Note 3.2's figures is [amount].
The evidence, as filed
Screenshot withheld to protect the company’s identity: Annual Report 2025, page 263; Annual Report 2024, page 236; Annual Report 2025, page 265; Annual Report 2025, page 264. 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 Key estimates note: 'The [amount] [wording masked]'; amounts due from subsidiaries note: 'The [amount] [wording masked]'; the 2024 report: total provision [amount] at [date]. | What the rule requires One figure, [amount], for the provision brought forward, and the closing provision ([amount] on the stated figures) given against the [amount] net balance. |
What we checked: Note 1.3, Note 3.2, the Company Balance Sheet and the 2024 report's Note 3.2.
The rule
IAS 1 Presentation of Financial Statements, paragraph 125 (applied in the Company's accounts under FRS 101)
Version relied on: FRS 101 / FRS 102, FRC, as amended and in force for the financial year reviewed
The accounts must disclose the key assumptions and other major sources of estimation uncertainty that carry a significant risk of a material adjustment to assets or liabilities within the next year.
Why it applies here: the key estimates note repeats the current-year charge where it meant the brought-forward balance.
Why it matters
A reader of the key estimates note would take the brought-forward provision as [amount], and the closing allowance as [amount] rather than [amount].
Exposure
Presentation inconsistency in the Company's notes; no amount in the primary statements is affected.
Our workings
Note 1.3 says the Company recognised [amount] of expected credit losses in the year (FY24: [amount]) and that the [amount] [wording masked]. Note 3.2 says a further [amount] was recognised (FY24: [amount]) and that the [amount] [wording masked]. The 2024 report states that the [amount] charge resulted in a total provision of [amount] at [date].
the two notes differ by [amount] on the brought-forward provision; on Note 3.2's figures the closing provision is [amount] (workings).
Because neither note states the closing total, which the 2024 report did, a reader cannot see the size of the allowance against the net receivable without rebuilding it.
| Item | Computation (£m) |
|---|---|
| Difference between the two brought-forward figures | [n] - [n] = [n] |
| Closing provision on Note 3.2's figures | [n] + [n] = [n] |
| Difference as % of the closing provision | [n] / [n] = 50% |
Management’s best defence, and our reply
Note 3.2 is the detailed note and states the brought-forward figure correctly, and the net receivable on the balance sheet is unaffected, so no reader is misled about the carrying amount. The key estimates note is a summary and the slip is evident when read with Note 3.2. However, the two audited notes state different figures for the same balance, and with the closing total no longer given a reader has to go back to the 2024 report to know which is right.
The fix
- Note 1.3 to read: 'The [amount] [wording masked], giving a total provision of [amount] at the reporting date.' Add the same total to Note 3.2.
Evidence relied on
| # | What it shows | Type | Where |
|---|---|---|---|
| 1 | Key estimates note: brought-forward provision given as [amount] | Document | Annual Report 2025, page 263 |
| 2 | Note 3.2: brought-forward provision given as [amount]; no closing total | Document | Annual Report 2025, page 265 |
| 3 | Net balance against which the provision is held | Document | Annual Report 2025, page 264 |
| 4 | The 2024 report: provision at [date] was [amount] | Document | Annual Report 2024, page 236 |
| 5 | 2024: investments in two finance subsidiaries written down to nil | Document | Annual Report 2024, page 236 |
| 6 | 2024: the same note's policy treats all amounts due from subsidiaries as low credit risk | Document | Annual Report 2024, page 236 |
| 7 | 2024: expected credit losses recognised in each year | Document | Annual Report 2024, page 236 |
| 8 | 2025: the low credit risk policy is repeated unchanged | Document | Annual Report 2025, page 264 |
| 9 | 2025: a further [amount] expected credit loss is recognised under the same policy | Document | Annual Report 2025, page 265 |
Absence check
- Document
- Annual Report 2025
- Where it would appear
- [wording masked]
- What is missing
- the total expected credit loss provision at [date]
- Pages looked at
- p.260-266 (Company statements and notes)
- Result
- 'ECL provision' hits p.263 and [n], the two sentences under test, neither giving the closing total; '[wording masked]' hits p.263, the current-year charge of [amount]; '[amount]' hits p.41, [n] and [n], which are patent-settlement proceeds and a senior notes issue, unrelated; 'total ECL provision' has no hits.
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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