Status of Audit for Aktsiaselts Silvano Fashion Group Revealed
Understanding the Audit Challenges Faced by Silvano Fashion Group
Aktsiaselts Silvano Fashion Group, referred to as the Issuer, is commencing its statutory audit of the annual report for the fiscal year ending on December 31, 2024, as mandated by law and Nasdaq Tallinn Stock Exchange regulations. However, the audit will be conducted partially, where the subsidiaries' annual reports will undergo separate audits based on their jurisdiction, while the consolidated annual report of the Issuer’s group faces significant auditing hurdles.
Impact of Geopolitical Factors on Auditing
Out of the eleven subsidiaries within the Issuer's group, seven operate in Russia or Belarus, which serve as the primary spheres for the Issuer's production and economic activities. The ongoing military conflict in Ukraine has led Estonian audit firms to terminate their partnerships with Russian and Belarusian audit companies. These firms have also halted their operations in those regions due to related sanctions. Consequently, the annual reports for the subsidiaries located in Russia and Belarus can only be audited separately through local service providers in compliance with local laws.
Concerns Regarding the Audit Process
Conducting a formal audit of the consolidated annual report, without a thorough verification of the financial data coming from Russian and Belarusian subsidiaries, fails to enhance the reliability of the reported figures. This approach essentially renders the audit process insufficient for establishing financial accuracy.
Cost Implications and Alternatives
The burden of performing a formal audit of the consolidated annual report has proven to be significantly disproportionate. The Issuer’s management board has so far received a quotation from only one audit firm, which is remarkably higher than the prevailing market rates. As it stands, the consolidated annual report will not be audited until the underlying reasons for these challenges are resolved.
Looking Ahead: Assurance for Shareholders
The Issuer plans to explore alternative avenues to assure its shareholders while navigating these auditing obstacles. Although the current auditing landscape poses challenges, the commitment to transparency and compliance remains paramount for Aktsiaselts Silvano Fashion Group (Tallinn: SFG1T).
Frequently Asked Questions
What is the reason for the partial audit of Silvano Fashion Group?
The audit is partially conducted because the subsidiaries located in Russia and Belarus face challenges due to geopolitical tensions and sanctions.
How many subsidiaries does Silvano Fashion Group have?
Silvano Fashion Group has eleven subsidiaries, with seven based in Russia and Belarus.
What are the implications of the audit process on financial reporting?
The audit process's limitations may affect the reliability of the consolidated annual report due to insufficient checks on the subsidiaries' financial data.
Is there an alternative audit method being considered?
Yes, the Issuer is exploring alternative methods to provide additional assurances to stakeholders regarding their financial reporting.
When will the consolidated report undergo formal auditing?
The consolidated report will not be audited until the current challenges, particularly those related to the subsidiaries in Russia and Belarus, are alleviated.
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