I have been wondering for a while how auditors fix their materiality limits so I read eight audit reports of four large audit firms [1] to see if I could find anything amusing on this Oh so serious and boring subject. Their approaches to the subject are quite different. Some auditors choose a percentage against…
AstraZeneca have an odd risk which they call “emerging risks.” They describe them as follows: “Emerging risks are ‘new’ risks that may challenge us in the future.” [1] The important word here is ‘may’. But how can they be important, even material enough to put in a financial report, when they don’t know exactly what…
I am surprised by the inventiveness of companies that use 52 weeks annual reporting instead of the more usual 12 months. I have often wondered why they think that 364 days is better than 365. They must believe that this one day is important to leave out, but they never tell us why. Sometimes the…
Bristol Myers, as pioneers of the future, introduce a unknown business risk in their 2021 Annual Report: “Increased use of social media platforms present risks and challenges.” They are afraid of inappropriate use of certain media vehicles and of ‘inaccurate posts or comments’. All this according to them could damage their ‘reputation, brand image and…
The Scottish like the word uplift and have given it many different meanings, none of which accountants use. The first Scottish use of uplift can be to make someone proud. Accountants are not interested in pride so have not used this meaning. The second Scottish use of uplift is in the collecting of rent or…
Here is their risk statement: “Increasing levels of water stress which reduces the level of the availability of water for our operations.” [1] Perhaps their manufacturing sites are in the desert, but this information has not been included in their annual report. However, later they announce that the water stress risk has a low risk…
I found the word ‘trigger’ in several annual reports. Not as you might guess in the sense of pulling the trigger of a gun, because none of the annual reports related to gun manufacturers. But often companies use it as a verb, in the sense of ‘to cause or bring about’. Sanofi for instance uses…
Have you ever noticed that when companies acquire other organisations, they turn these opportunities into a risk? They must have known the risks at the moment of acquisition. They must have estimated their capacity to integrate the acquisition and concluded that the anticipated synergies and benefits far outweighed the risks, or they would never have…
I wonder sometimes whether top management read their annual reports. If they did they would realise that some of their statements reach the level of ludicrous. Here, for instance are some ‘unable to predict’ statements taken from annual reports: “We are also unable to predict if and when any changes to laws or regulatory policies…
Some companies consider foreign currency is a risk but others not, yet currency movements are the way of life they have chosen and is just another business as usual excuse to add to the risk statement. Six companies in my review: Abbott Laboratories, Abbvie, Bristol Meyers Squibb, Johnson and Johnson, Novartis and Sanofi follow this…