APB issues auditors new going concern guidance

Audit watchdogs have rolled out new guidance for auditors on their going concern responsibilities for listed companies.

As the credit crunch deepened, auditors have been embroiled in tough conversations with companies on the issue of going concern warnings, which cast doubt on a company's ability to carry on trading for the following 12 months.

The Auditing Practices Board update clarifies auditors responsibilities in reviewing a listed company’s statement as to whether the business is a going concern and in reviewing corporate governance statements required by the FSA under Disclosure and Transparency Rules.

The changes include auditors being called upon to ensure information in separate corporate governance statements about internal control and risk management systems detailing financial reporting processes and share capital structures is consistent with the information in the annual accounts.

It comes after the FRC released fuller guidance earlier this year for directors on going concern in response to the credit crisis.

"This new guidance for auditors clarifies their responsibilities in reviewing whether the directors’ statements on going concern in their Annual Reports are consistent with the FRC guidance for directors,” said Richard Fleck, chairman of the APB.

Further reading:

Download the guidance here

APB ramps up calls for 'going concern' perspective