6.13 The auditor's report gives two different 2024 materiality percentages, and dates the loss of control of [former subsidiary] a day later than the accounts
UK Company B · a UK-listed technology and logistics group · Drafting slip
In brief
The summary of the audit approach says 2024 materiality equated to [n]% of total assets excluding goodwill; the materiality table two pages later says [n]% for the same year. The 2024 auditor's report had the same pair ([n]% in its summary, [n]% in its table). The key audit matter and scoping section say control of [former subsidiary] passed on [date], while the income statement footnote says the Group transferred control on [date] and deconsolidated from [date].
The evidence, as filed
Further pages withheld to protect the company’s identity (seven): Annual Report 2025, page 172; Annual Report 2024, page 161; Annual Report 2025, page 176; Annual Report 2025, page 175; Annual Report 2025, page 177; Annual Report 2024, page 157; Annual Report 2025, page 183. 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.
Names, figures, dates, logos and any wording that could be searched back to the company are boxed out in grey; the point is highlighted in yellow.
What the report shows, and what the rule requires
| What the annual report shows | What the rule requires |
|---|---|
| What the annual report shows p.172: [n]% (FY24: [n]%); p.176: [n]% (FY24: [n]%); p.175 and p.177: control passed / change of control on [date]; p.183: control transferred on [date] | What the rule requires One percentage for 2024 materiality in both places; the date of loss of control stated as [date], consistent with the financial statements |
What we checked: Auditor's report summary, KAM [n], materiality table, scoping against the income statement footnote and the 2024 auditor's report (Annual Report [amount].157, [n])
Why it matters
No effect on the opinion or the accounts; the inconsistencies make the auditor's explanation of materiality and of the key audit matter harder to rely on.
Exposure
Drafting only.
Our workings
the summary table on p.172 and the materiality table on p.176 give different 2024 percentages for the same materiality of [amount] on the same basis; the 2024 report's own summary and table differed in the same way. The auditor's report twice dates the change of control of [former subsidiary] to [date]; the accounts say control was transferred on [date] and [former subsidiary] deconsolidated from [date].
Management’s best defence, and our reply
The auditor's report is the auditor's document, and the materiality amount of [amount] is the same in both places; the percentage may reflect the planning-stage base in one place and the final base in the other. The one-day difference on [former subsidiary] is immaterial. However, a single report should state one basis for the same year, and the dates of loss of control should match the accounts the opinion covers.
The fix
- Ask the auditor to use one 2024 percentage in both places and to date the loss of control of [former subsidiary] as [date] (or explain the difference).
Evidence relied on
| # | What it shows | Type | Where |
|---|---|---|---|
| 1 | Summary of audit approach: 2024 basis [n]% | Document | Annual Report 2025, page 172 |
| 2 | Materiality table: 2024 basis [n]% | Document | Annual Report 2025, page 176 |
| 3 | Key audit matter dates the change of control to [date] | Document | Annual Report 2025, page 175 |
| 4 | Scoping section repeats [date] | Document | Annual Report 2025, page 177 |
| 5 | The accounts date the transfer of control to [date] | Document | Annual Report 2025, page 183 |
| 6 | 2024 auditor's report summary: materiality [amount] is [n]% of total assets excluding goodwill | Document | Annual Report 2024, page 157 |
| 7 | 2024 auditor's report materiality section: the same [amount] is [n]% | Document | Annual Report 2024, page 161 |
| 8 | Total assets [amount] at [date] | Document | Annual Report 2024, page 168 |
| 9 | Goodwill [amount] at [date] | Document | Annual Report 2024, page 41 |
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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