What is Director’s Report? What is Auditor’s Report?

At the end of financial year, the directors draft a short statement on the overall activities of the company which is called director’s report. This is attached to the company’s annual report. Such a report indicates whether there had been any change in the company’s nature of business. It is an instrument through which the Board describes the business performance during last financial year and prospect in the years to come. The companies Act requires that the director’s report should deal with the company’s affairs in general and indicate the amount recommended as dividend and the amount proposed to be carried to reserves.

Contents of Directors Report

A director’s is attached to the annual report of a public limited company. Contents of such report are governed by the Companies Act. In our country, in addition to the companies’ act 1994, The Dhaka Stock Exchange Listing Regulations 1997 also govern the contents of director’s report. According to the company’s act 1994 and The Dhaka Stock Exchange Listing Regulations 1997, we can identify the following contents of director’s report:

• Addressing the shareholders
• The objectives of the company in general
• Statement of the company affairs
• Statement of the company affairs
• Principal activities of the company and trend of activities including the range of competition
• Indication to future developments and any significant shift in policy
• Allocation of profits in dividends. Reserves and in any other form
• Contribution to the national exchequer
• Any big deal in the form of lease, loan or debenture
• Information about election, re-election or retirement of directors
• Employment policy, labor relations and the total number of employees at the end of the year
• Names of the Directors during the last financial year

What is Auditor’s Report?

The report of a certified auditor or auditors stating the accuracy of financial statements of a public limited company is known as auditor’s report. It an essential part of a company’s annual report. At the end of every accounting year, the company has to prepare balance sheet, profit and loss account, cash flow statement and other related schedules to support the accounts. After preparation of books of accounts, the auditor examines and verifies those to known whether the statements represent a true and fair view of company affairs. After such verification, the auditor makes a report stating the following:

• Whether the auditor has obtained all the information and explanations which were necessary for the purpose of his audit
• Whether proper books of accounts as required by law have been kept by the company
• Whether the financial information disclosed in the financial statements of the company has been prepared using accepted accounting principles
• Whether the accounting policies are consistently applied year after year
• Whether the company’s balance sheet and profit and loss account are in agreement with the books of account and returns