An auditing firm, PricewaterhouseCoopers-Ghana, CBL external auditors have completed audit of the Bank’s IFRS financial statements. In conclusion of the financial statements, the auditors reported "the financial statements give a true and fair view of the position of the Central Bank of Liberia as at December 31, 2010 and of its financial performance and its cash flows for the year ended in accordance with International Financial Reporting Standards". In 2006, the leadership of the CBL took an important strategic decision to transition to IFRS (International Financial Reporting Standards) to complete within two years which was done on schedule; the CBL in its endeavor has produced IFRS complaint for three consecutive years, since December 2008 noting however, many Central Banks in the region are still not IFRS complaint.
The CBL leadership keeping Liberia on course with other financial institutions has improved Financial Reporting adopted by the International Accounting Standards Board keeping international recognition regarding financial instruments.
International Financial Reporting Standards (IFRS) are principle-based Standards, Interpretations and the Framework (1989) adopted by the International Accounting Standards Board (IASB).
Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). IAS were issued between 1973 and 2001 by the Board of the International Accounting Standards Committee (IASC). On 1 April 2001, the new IASB took over from the IASC the responsibility for setting International Accounting Standards. During its first meeting the new Board adopted existing IAS and SICs. The IASB has continued to develop standards calling the new standards IFRS.
With regards to significant accounting policies, of Generally Accepted Accounting Principles, PWC in its management report submitted to the audit Committee of the CBL Board states "management has described as critical accounting estimates and practices those involving the impairment of loans and held-to-maturity investments, valuation of retirement benefit obligations, and estimation of liability for currency in circulation. Management has defined these areas as critical because they account for material transactions, are fundamental to the portrayal of CBL’s financial condition and operating results, and required management judgment to ascertain the valuation of assets and liabilities. We believe management ‘s disclosures of the critical accounting estimates made in the financial statements are appropriate".
Unqualified Opinion-An opinion is said to be unqualified when the Auditor concludes that the Financial Statements give a true and fair view in accordance with the financial reporting framework used for the preparation and presentation of the Financial Statements. An Auditor gives a Clean opinion of Unqualified Opinion when he does not have any significant reservation in respect of matters contained in the Financial Statements. The most frequent type of report is referred to as the Unqualified Opinion, and is regarded by many as the equivalent of a "clean bill of health" to a patient, which has led many to call it the Clean Opinion, but in reality it is not a clean bill of health. This type of report is issued by an auditor when the financial statements presented are free of material misstatements and are represented fairly in accordance with the Generally Accepted Accounting Principles (GAAP), which in other words means that the company’s financial condition, position, and operations are fairly presented in the financial statements. It is the best type of report an auditee may receive from an external auditor.
An Unqualified Opinion indicates the following:
(1) The Financial Statements have been prepared using the Generally Accepted Accounting Principles which have been consistently applied;
(2) The Financial Statements comply with relevant statutory requirements and regulations;
(3) There is adequate disclosure of all material matters relevant to the proper presentation of the financial information subject to statutory requirements, where applicable;
(4) Any changes in the accounting principles or in the method of their application and the effects thereof have been properly determined and disclosed in the Financial Statements.
It was also stated by the auditors that "our overall view on the quality of accounting principles is that CBL accounting policies and their application are sound and prudent. All significant matters are identified early, discussed and all views appropriately considered. In our experience management has indicated a desire to have such transactions accounted for in accordance with preferable practice when guidance is clear and is cautious when guidance is either evolving or directly applicable".
In a further note the external auditors further indicated that "we are also satisfied that significant estimates and judgments made by management were reasonable and were established processes applied consistently from period to period and have been discussed with the Audit committee. Changes in key assumption and methodologies are thoroughly discussed and review by management and PWC as appropriate".
PWC auditors also stated that "we have completed our review of CBL’s financial statement for the year ended December 2010 with all disclosures required under IFRS. Based on the procedures conducted on the financial statements as of December 31, 2010 and for the year ended, we have not encountered where CBL failed to appropriately disclose a material matter within the financial statements. Our audit includes giving substantial attention to the adequacy of the control processes for estimating as well as testing appropriateness of these estimates.
In final words, the auditors declared, "Nothing came to our attention that indicates any suspected or actual fraud during the audit". Hence, according to the auditors, they did have any disagreement with management. Regarding independence, the external auditors reconfirmed that all their team members on the CBL engagement are independent of the bank. And on the ongoing concern, PWC intimated "nothing came to our attention which indicates that the bank will not be able to operate in the foreseeable future".
The auditor's report is a formal opinion, or disclaimer thereof, issued by either an internal auditor or an independent external auditor as a result of an internal or external audit or evaluation performed on a legal entity or subdivision thereof (called an "auditee"). The report is subsequently provided to a "user" (such as an individual, a group of persons, a company, a government, or even the general public, among others) as an assurance service in order for the user to make decisions based on the results of the audit.
An auditor’s report is an essential tool when reporting financial information to users, especially in business. Many third-party users prefer, require financial information to be certified by an independent external auditor, while many auditees rely on the reports of the auditors to verify or certify their information in order to attract investors, obtain loans, and improve public appearance. Financial information to many users without an auditor’s report is "essentially worthless" for investing purposes.
The auditor's reports on financial statements are not evaluations nor any other similar determination used to evaluate entities in order to make a decision. The report is only an opinion on whether the information presented is correct and free from material misstatements, whereas all other determinations are left for the user to decide.
There are four common types of auditor’s reports, each one presenting a different situation encountered during the auditor’s work.