Accounts Warranty Expert Witness UK

The accounts warranty is typically the most fundamental financial warranty in an SPA. It warrants that the financial statements have been prepared in accordance with applicable accounting standards, give a true and fair view of the financial position, and were prepared consistently with prior periods.

Disputes arise where specific items in the accounts were misstated: inadequate provisions, incorrect revenue recognition, failure to capitalise leases under IFRS 16, or incomplete disclosure of contingent liabilities.

The expert reviews the financial statements against the applicable accounting standards (IFRS or FRS 102) and the specific policies stated in the notes. For each alleged breach, they identify the correct accounting treatment, compare it to the treatment adopted, and quantify the financial impact.

Prior period consistency is a key area of dispute. Where accounting policies changed without adequate disclosure, or where the same item was treated differently across periods, the expert must assess whether this constitutes a breach of the accounts warranty.